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SSyyrriiaann AArraabb RReeppuubblliiccPPrriimmee MMiinniissttrryySSyyrriiaann IInnvveessttmmeenntt AAggeennccyy

The Second Annual Investment Report

In Syria For the year 2007

This Report was translated in cooperation with Enhance the Investment Environment in Syria Project - UNDP

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We have commenced a development process of wide scope and dimensions of which required recharging our energies and resources and investing the time at a maximum efficiency.

The point of departure was providing the appropriate political, intellectual and legislative environments, where the political decisions have been taken, that constituted the suitable atmosphere to perform the required economic reforms, and opened an extensive compass to a new mobility of the national economy.

Most of the economic sectors have been opened to the private enterprises. The reform procedures provide an important impetus for investment in several fields. A variety of decisions concerning the development of the public sector and dealing with its production, managerial and financial situations have been issued.

We have decided to establish a number of industrial cities and off-shore zones which succeeded in encompassing promising investments. Within our priorities, there will be provision of the agricultural sector with the prosperity' requirements and shielding it from the adverse consequences, due to its vitality in the Syrian economic sector and its importance to our Food and National Security.

The investments had multiplied 12 times over, and the Syrian exports have doubled, namely to /505/ billion Syrian Pounds.

Tremendous efforts have been put, into the development of the human resources and the investment in it, and used the help of the international experts concerning this issue, and we do endeavor to achieve more in this field, so the constant capacity building become a primary heading in our government plans.

It is vital to accomplish the appropriate environment to encourage and diversify the investments and forward it to the promising sectors in our country, and to overcome all the bureaucratic hindrances, which prevent these targets; particularly that we have developed the laws governing the investment, and offered all facilitations. Despite all these circumstances, it was uplifting, that the total amount of the projects licensed in accordance with the Investment Law has reached /470/ billion Syrian Pounds, and a hundred billion Syrian Pounds in the Tourism Sector. Definitely, the result lies in the implementation, and we should strive to translate all these projects into reality. It is essential to adopt the regional planning in our development policies to orient our future plans towards the right direction by drawing a clear economic, social, educational and investment map in the light of the necessities on one hand, and of the functional tasks of the different regions of the country on the other hand. And within the frame of achieving the balanced development that integrates with the trend towards the decentralized administration in our current plans, to guarantee at the end, the comprehensive competent development at the level of every region and governorate in an integrated and harmonized form with the rest of the regions and governorates in the country

17 /7/ 2007

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The Prime Minister The Head of the supreme

Council of Investment Eng. Mohammed Naji Otari

Syria welcomes the Arab and Foreign investors and provides them with all the facilitations. The investment in Syria yields guaranteed outcomes for the investors and high added value.

Deputy Prime Minister for Economic Affairs

Mr. Abdullah Al-Dardari

Syria offers all the facilitations to make the investments successful, and it may benefit from the all the experiences which might profit in the field of business and investment.

His Honor Dr. Ahmad Hassoun, Mufti of the

Republic and His Honor the

Patriarch Agnatious the Fourth Haziem

Of the prettiest moments in the opening ceremony of the Second Expatriates Conference, was when the two hands of the Mufti of the Republic, Dr. Ahmad Hassoun, and his Honor Patriarch Haziem Agnatious the fourth entwined indicating the visibly the fraternity of religions in Syria. His Honor Dr. Ahmad Hassoun spoke in a tender way touched the bottom of the hearts. The message is one:

Syria is the land of safety and peace, and it is the duty of the expatriates to invest in it.

His Honor Dr. Ahmad Hassoun concluded his elegant speech with the statement: “Syria is a Blessed Land. If anyone invests a good piaster, it yields

back a hundred for him”

Prince Al-Waleed Bin Talal � We have found the investment in Syria fine and profitable,

therefore, we did start constructing this international project (The

Four Seasons Hotel). We felt so much delighted when we did not face any obstacles.

� Syria can enter the world of growth and investment through the

widest gates. This is what we are all looking for.

� We are fortunate to be in the safe, honest and peaceful Syria, and Syria is fortunate in having the President Bashar Al-Asad.

� These are the generous signs that I open this project today to

affect in other projects, God willing, on a part of the beloved

country. Your Excellency Mr. President, this is my commitment and the commitment of my partners in the hospitality Company of

The Kingdom.

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Preface:

The Syrian Investment Agency is glad to present its annual report of the year 2007 which aims to introduce an analytical insight about the most important developments the Syrian economy in general, and the investment in particular. This is done through diagnosis its most essential trends and its evolution. The carefulness increases nowadays, that this report shall establish for issuing a national periodical economic report, to assist in following up the implementation of the tenth five-year plan, and supports the efforts of the Syrian government in the economic reform process that has just started yielding its fruits.

The investment in Syria during the last few years has become a story of continual success, represented not only in the amounts of direct investment inflows, but also in its divergence into variety of sectors, particularly the industry, the agriculture, the tourism, the financial services, the ICT sector, which points out the attractiveness and the revenue these Syrian economic sectors have without exception. It also shows the policies the government adopts to motivate the investments to enter productive sectors. The items of this reports comprises of six main chapters:

o The first chapter: introduces an evaluation of the most important developments at the level of Macro-economic indicators.

o The second chapter: concentrates on the real situation of the investment environment enhancement.

o The third chapter: deals with the developments in the investment field under the Investment Law /10/ of 1991, and the Legislative Decree /8/ of 2007.

o The fourth chapter: offers a general insight of the investment situation in the other activities and sectors.

o The fifth chapter: explains the attitude of the Foreign Direct Investment.

o The sixth chapter: includes the concluded proposals, recommendations and results.

We do not claim the perfection of our achievement. However, it is a participation in the activity towards developing the investment data and making it to satisfy the needs of the policymakers, the decision-makers, the business society, the academicians, the researchers and the interested people. We do this leaving a wide room for the ideas, the experiences and the opinions. The report essentially depends on the data available at the Syrian Investment Agency either produced in it or collected from the ministries and the official concerned bodies. We take the advantage of this opportunity to praise the efforts exerted by these ministries bodies, especially the departments of investment or statistics and planning in them. We acknowledge the workers in the Investments Agency, particularly the committee of preparing this report: (Mr. M. Seif Addien, Mr. Haytham Mustafa, Mr. Wael Shihawi, Lina Arrawas and Suad Sama'an) who participated directly in issuing this report.

The best great thanks are presented to Mr. President Bashar Hafez Al-Asad (God protects him) for his continual carefulness, concern and observation of the progress of the economic reform process, and the investment in the first place.

The Syrian Investment Agency The General Manager Dr. Mustafa Al-Abdullah Al-Kafri

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Contents 3

Chapter one Macro- Economy Indexes 61 Economic Growth trends 62 General Budget 63 Economic variables in the national economy according to the

national balances 8

4 Inflation 12 5 GDP per capita 12 6 Unemployment rates 12 7 Trade Balance 13 8 Balance of Payments 13 9 Taxation System in Syria 14

Chapter two Investment Environment 20 1 Enhancement of investment environment in Syria 20 2 The most important positive effective economic and political

developments on the Investment Environment during year 2007 3 Future Investment Climate 25 4 Investment Laws and Regulations in Syria 26 5 Institutional Capacity Building 27 6 Enhance The Investment Environment Project 28 7 Investment Promotion 30

Chapter Three The Investment under the law No.10 of 1991 and the Investment Encouragement Decree No.8 of 2007.

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I- Industrial Sector 38 A Licensed Investment Projects 38 B Implemented Investment Projects 41 C Other Investment Projects 42

II- Industrial Cities 43 A Investment Projects At the Industrial City of Hassya 44 B Investment Projects At the Industrial City of Sheikh

Najjar 45

C Investment Projects At the Industrial City of Adra 46 D Gross investment projects at the Industrial Cities. 47

III- Transportation Sector 48 A Licensed Investment Projects 48 B Implemented Investment Projects 50

IV- Real Estate Compounds Sector 51 Licensed and Implemented Investment Projects 51

V- Agricultural Sector 51 Licensed and Implemented Investment Projects 51

VI- Health Sector 52 A Specialized Hospitals 52 B Pharmaceuticals and Medical equipment industry 53

VII- Oil, Energy & Minerals Sector 53

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Licensed and Implemented Oil, Energy & Minerals Sector Investments

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VIII- Investment Projects distributions on the governorates 54 IX- Investment Projects distributions according to the

investment form (BOT- PPP…) 56

X- Estimated Job Opportunities for the Investment Projects 58 XI- Volume of the machinery and imported equipments for

the Investment Projects 59

XII- The Investment Costs for the Investment projects 59 XIII- The Expansion in the implemented projects 59

Chapter Four Investment Situation of the other sectors 60 1 Tourism

Sector 60

2 Banking Sector

66

3 Insurance Sector

68

4 Off-shore Sector

68

Chapter Five FDI 70 A Net FDI inflows 70 B Licensed FDI projects 71 C Implemented FDI projects 75 D Arab FDI trend fluctuation 76

Chapter Six the concluded proposals, recommendations and results 78 Conclusion 81 Appendices 82

Large Investors List 82 Arab & International Agreements List 84 Government's Addresses List 88 Important Websites List 90 General Indicators 91

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Chapter one: Macro-Economy Indexes

The Syrian economy is experiencing a real transition phase represented in the high economic growth rates witnessed last year. Such high rates are supported by a large group of reformatory procedures initiated by the Government which aim to make the Syrian economy a progressed one based on policies which are characterized by transparency, and working within a strong legal frame and effective institutions in accordance with the international standards. The economic growth has achieved high rates, which have never been witnessed before, and it is possible that such rates will continue over the coming years. Policies makers spare no effort to maintain the continuity of the high growth rates with particular concentration to ensure that the Syrian business environment is free of obstacles. The following is demonstration of the most important developments in the field of macro economy since the beginning of the third millennium.

1. Economic Growth trends:

The year 2007 has witnessed an increase in the actual GDP to be (%6.5) compared with (%5.1) in 2006. In the light of this rate, the Government is optimistic over the GDP growth over the coming years and that it is an attainable goal.

Figure 1: Economic Growth Rate during the period(2000�2007)

5.15.9

1.1

6.7

4.55.1

6.5

012345678

2001 2002 2003 2004 2005 2006 2007

Resource: SBS data

2. General Budget:

Looking at the development of the state's general budget, there seems the increase of the budget rise (both investment and current) over the last six years by (%30), thus the investment budget was increased by (%8.3), while the rise of the current budget was increased at the same period by (%43.5), this is shown in the following table:

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Table 1: State's General Budget Development

For the years 2003-2008 in Billion SYP

Years Investment Current Total

2003 211 209 240

2004 217 233 450

2005 180 208 460

2006 195 300 495

2007 258 330 588

2008 230 370 600

Increment rate 8.3% 43.5% 30%

Resource: Ministry of Finance Data

Table2: executed transactions of the State's general budget for the years 2000-2007(millions SYP)

Description 2000 2001 2002 2003 2004 2005 2006 2007*

Gross incomes

245574 305286 301660 320939 342465 356290 434865 503686

Current incomes

170872 226325 221583 236122 238242 251509 296625 263928

Investment incomes

74702 78961 80077 84817 104223 104781 138240 239758

Gross spending

246193 274831 314050 353651 405145 431402 493700 588000

Current spending

151297 164761 178332 200780 248497 277044 317213 330000

Investment

spending

94896 110070 135718 152871 156648 154358 176487 258000

Shortage -619 30455 -12390 -31607 -62680 -75112 -58835 -84313

Donations 3792 0 0 1105 0 0 0 0

Foreign Loans

15180 11796 11456 9708 11572 14769 14159 17937

* Estimated: Resource: Ministry of Finance Data

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3- Fiscal and Monetary sector:

Despite the effect of many adverse factors on the plans set for various economic activities, GDP production and the output did maintain the general growth track in 2007 as demonstrated by the data of the production and output estimates in 2007 which is considered as the second year of the 10th five year plan which included ambitious and actual trends and objectives of the Syrian economy over the coming five years, the most important of which is the fulfilling an economic growth rate of not less than (%7) at the end of the plan and giving to the social service sector especially, education, health, potable water and housing: A. Total Local Production with the market fixed price for the year 2000:The GDP rate grew of the fixed prices for the year 2000has increased from (%40) in 2004 to (%4.7) in (2005-2006) then reached (2169 billion Syrian Pounds) in 2007 which marks an increase by (%5.7) over 2006. The increase included some economic sectors such as trade transportation, banking, insurance and services. The sector of agriculture and irrigation has contributed about (%19.3), extraction industry (%7.9), transformation industry (%21.9), and trade (%13.6), services (%11.7) transportation, communication and storage service (%12.2) and the remaining sectors (%14) this is shown in the following table:

Table 3: GDP with the fixed prices for the year 2000 estimated in millions (SYP)

2005 2006 2007 Economic

sectors Production Value contribution Production

Value contribution

Increment rate Production

Value contribution

Increment rate

Agriculture and irrigation 398112 20.3 432713 21.1 9 418096 19.3 -3

Extraction industry 199915 10.2 192594 9.4 -4 171450 7.9 -11

Transformation industry 463869 23.7 473467 23.1 2 473467 21.9 0

Water & Electricity 58707 3.0 64346 3.1 10 81425 3.8 -5

Constructions 93238 4.8 101203 4.9 9 108678 5.0 7

Wholesale and retails 251495 12.8 267983 13.1 7 295041 13.6 10

Transportation & Warehousing 183944 9.4 202233 9.9 10 265473 12.2 31

Banking, insurance & real estates

63305 3.2 45979 3.2 4 106762 4.9 62

Social Service 229013 11.7 239068 11.7 4 252853 11.7 6

fees 17500 9.0 11901 0.6 -32 15153 0.7 27

Sub total 1959098 100 2051487 100 4.7 2169312 100 5.7

Resource: SBS data

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In addition, the increase of the private sector contribution in the total local production with the fixed price which increased from (%52.3) in 2000to (%60.5) in 2007, proportionally with the regress of the private sector contribution in the GDP from (%47.7) in 2000 to become (%39.5) in 2007 as shown on the following table:

Table 4: Private & public sectors GDP contributions in the fixed prices estimated in Millions (SYP)

Production Production contribution % Years

Public Sector

Private sector Total Public Private total

2000 742303 814816 1557119 47.7 52.3 100

2001 722007 908607 1630614 44.3 55.7 100

2002 749017 960752 1709769 43.8 56.2 100

2003 720402 1025040 1745442 41.3 58.7 100

2004 779479 1069296 1848775 42.2 57.8 100

2005 789133 1169965 1959098 40.3 59.7 100

2006 809917 1241570 2051487 39.5 60.5 100

2007 856434 1312878 2169312 39.5 60.5 100

Resource: SBS data

B. GDP with the fixed price market for year 2000

The growth rate of the GDP with the fixed prices did increase from (%4.5) in 2005 to be (%5.1) in 2006 and then (%6.5) in 2007. According to the initial data rate in the 2007 GDP amounted to 1269 billion Syrian Pounds with fixed price for year 2000. This was accompanied by an increase in GDP in 2007 for the sectors of (building and construction, transportation and communication, trade, finance and insurance and services). This affected the rate of the service and economic sectors contribution in forming the GDP as agriculture and irrigation contribution remained about (%23) while rate of the extraction industry contribution regressed from (%16.6) in 2005 to (%13) in 2007. The rate of transport contribution increased to (%12.1), finance and insurance to (%6.5) and service to (%15). The following table states the contribution rate of all the economic sectors in the GDP:

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Table 5: GDP in Fixed prices for the years 2005-2007 estimated in millions (SYP)

2005 2006 2007 Economic sectors Production

Value contribution Production Value contribution Increment

rate Production

Value contribution

Increment rate

Agriculture and irrigation 265504 23.4 292457 24.5 10 288486 22.7 -1

Extraction industry 188242 16.6 181662 15.2 -3 163371 12.9 -10

Transformation industry 84545 7.4 90056 7.6 7 96061 7.6 7

Water & Electricity 20992 1.8 24185 2.0 15 25161 2.0 4

Constructions 36438 3.2 39699 3.3 3 51674 4.1 30

Wholesale and retails 210094 18.5 221785 18.6 6 235812 18.6 6

Transportation &

Warehousing 125702 11.1 138451 11.6 10 153958 12.1 11

Banking, insurance & real estates

56582 5.0 58208 4.9 3 82631 6.5 42

Social Service 152702 13.5 160795 13.5 5 186212 14.7 16

fees -5702 -1 -14559 -1 155 -13546 -1 -7

Sub total 1134861 100 1192739 100 5.1 1269820 100 6.5

Resource: SBS data

Data indicate the increase of the private sector contribution in the GDP with the fixed price from (%56) in 2000 to (%65.5) in 2007. In return, the public sector contribution in the GDP proportionally as shown on the table:

Table 6: Private and Public sectors GDP contribution in fixed prices 2000-2007 estimated in millions (SYP) Production Production contribution %

Years Public Sector Private sector Public Sector Private sector Public Sector Private sector

2000 397560 506384 903944 44 56 100

2001 387529 562716 950245 40.8 59.2 100

2002 401534 604897 1006431 39.9 60.1 100

2003 376123 641496 1017619 37 63 100

2004 424902 661089 1085991 39.1 60.9 100

2005 415717 719143 1134860 36.6 63.4 100

2006 425750 766990 1192740 35.7 64.3 100

2007 438088 831732 1269820 34.5 65.5 100

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Resource: SBS data

It is to be indicated that, the noticeable increase of the (Government support) value for a number of the economic activities during the said period has affected the GDP growth rates with the market price as well as the contribution rates of there sectors. A regress was recorded due to the increase of the support amount from 49 billion Syrian pounds in 2004, (185 billion) in 2005 and (257) million in 2006. It is expected to be 374 billion in 2007, still continuous increase. C. Capital formation (public and private sectors investments)

The rate of capital formation of GDP in the national economy amounted to (%26) in 2006 with the fixed prices for 2000 equally (315) billion Syrian Pounds, public sector contribution (%46), of the total formation, private sector (%54) against (%26.2) in 2005 equalling (303) million Syrian Pounds, public sector contribution (%48) and the private sector (%52) of the total formation. The private sector contribution is excelling the public sector in the development process (2003-2006). This is shown on the following table:

Table 7: Capital formation of the public and private sectors investments in millions (SYP)

Capital formation in market

fixed prices for the year 2000 Production contribution %

Years Public Sector

Private sector

Public Sector

Private sector

Public Sector

Private sector

2003 147087 87731 234818 62.6 37.4 100%

2004 135770 145649 281419 48.2 51.8 100%

2005 145798 157331 303129 48 52 100%

2006 145000 170232 315232 46 54 100%

Resource: SBS data

Figur 2: The contributions of the private and public sectors in forming the capital formation in fixed prices 2000

0

50000

100000

150000

200000

2003 2004 2005 2006

Public Private

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4- Inflation:

The statistical data state a change that took place on the inflation rate (200-2007) which amounted to (%9.8) in 2000, then fluctuated to be (%12.9) in 2005, than regressed to be (%9.1) in 2007.

Table 8: inflation rates during the years 2000-2007

years 2000 2001 2002 2003 2004 2005 2006 2007

Inflation rate 9.8 2.5 -1.5 3.8 10.9 12.9 9.1 9.6

Resource: SBS data

5- GDP per capita

Data show an increase in the GDP capita (market fixed price 2000) by (%1.6) in 2004 over 2003 to be (%2.8) in 2005. It is expected that this share will increase in 2007 to be approximately (%3.3).

6- Unemployment rates

The workforce surveys implemented by the Central Bureau for Statistics (2000-2007) indicate a tangible decrease in the unemployment rates starting from (%10.9) in 2003 to about (%9) in 2004, and then to (%8) in 2005 while relatively raised to about (%8.3) in 2007. The number of the unemployed is estimated in mid 2007 at about 468 thousand persons. This was due to the procedures adopted by the Government to limit the unemployment phenomenon and increase investments.

Table 9: Unemployment rates during years 2000-2007

Years 2000 2001 2002 2003 2004 2005 2006 2007

Unemployment rate

9.5 10.3 11.7 10.9 9 8 8.2 8.3

Resource: SBS data

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7- Trade Balance

The trade balance tips in favour of the exports of goods with the prices current in (2000-2006) as the value of exports of goods and services increased from (305.7) million Syrian Pounds in 2006. Also, the value of imports has increased from (247.2) million Syrian Pounds to become (607.6) million Syrian Pounds during the same period as shown on the following table: Table 10: Trade Balance for the years 2000-2006 estimated in millions (SYP)

Goods and services in current prices years Exports Imports Surplus/shortage

2000 305680 247210 58470 2001 359417 313903 455414

2002 403670 345067 58603

2003 359528 306873 52655

2004 507497 474393 33104

2005 608497 589724 18773

2006 673544 607560 65984

Resource: SBS data

0100000200000300000400000500000600000700000

2000 2001 2002 2003 2004 2005 2006

Graph 3: Syrian Trade Balance development during the period 2000-2006

exportsimports

8- Balance of Payments

The total balance payments (current account, capital a financial) with current prices of 2000-2006 have recorded a deficit in the balance of payments in 2006 totalling -5851 million Syrian Pounds. This is shown on the table:

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Table 11: Balance of trade for the years 2000-2006 in Millions (SYP)

The current and investment account results in current prices years Credit Debit Balance

2000 419327 383308 36019 2001 472765 442508 30257

2002 505178 479821 25357

2003 469070 437870 31200

2004 672290 645827 26463

2005 797762 789564 8198

2006 821060 826911 5851-

Resource: SBS data

9. Taxation System in Syria1

The taxation system in Syria dates lack to the beginning of the 20th century. the dawn of independence, the features of the Syrian taxation system began to crystallize as various legislations were issued then provided for taxes as well as customs and non- customs duties. In the subsequent decades, other legislations followed and added new fees and duties or amended old fees old fees and duties. In the late 2003, a new phase for developing the taxation system has started. The first law issued was No.24 dated 2003 (Income tax law). This superseded law No.85 dated 1949, and law No.25 dated 2003 (Law of fighting tax evasion). Modern laws and legislations followed in the sector of fees and duties. The number of there new legislations are about 30 currently in force. A- Features of the Modern Syrian Taxation System The first phase of reforming the Syrian taxation system concentrated on:

• Abolishment of some old fees and duties which became unsuitable for the existing circumstances. In addition, their economic feasibility became no longer present such as cattle duties, machinery duties, grants and wills duties, expatriation duty, and consular certification duties. And other duties, the Ministry of Finance could through collection mechanism, not only compensate for the resources which used to come from such duties but could also increase them.

1 Reference: a comparative study by Dr. Mohammed Al-Hussein, the Minister of Finance, published in the Ministry of Finance website, 7/10/2007

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• Reduction of fees and duties rates: The old taxation system was characterized by high rates as income tax rate reached about (%92 and then lowered to about %63 and then to %35 on 1st Jan 2004 and again to %28 in 1st Jan 2007). Such high rates were the main cause for tax evasion in Syria. Duty rates were cut down including customs duties. For example, the highest customs duty rate amounted to %255, while today the highest rate is %60, the average customs tariff rate in Syria is %14.5. Customs duties for raw materials and production equipment were cut down to %1 for the raw materials and it may rise only to %5 for the rest of the half- made or made equipment. This formed such a real support for the Syrian industry and continued to the increase of direct investments over the last years.

• The new legislation have simplified the customs procedures and made the same easier and more transparent. The personal estimate of the finance department staff as well as personal relations was abolished. This was completely fulfilled in income taxes for real profits, wage and salary taxes, contracting, supplies, real estate trade and imports.

• Efforts for fighting tax evasion were launched parallel to the issue of law No.25 of the year 2003 which included deterrent measures against tax evaders. This law could get back important money to the treasury.

B- Results of the Syrian taxation system

Table 12: actual collection of the customs governmental fees including the tariffs for the years 1990-2007 as follows:

Year 1990 1996 2000 2002 2004 2005 2007Actual collection in

billions SYP 49.277 130.315 170.872 221.583 238.242 251.509 297

It is noted that the last years, starting from 2005, have recorded noticeable increases in the actual outcome despite the reduction in rates and the abolishment of some fees and duties and despite the raise of the GDP size with current prices especially in 2005 and 2007. the increases in 2007 has amounted to about 210 billion Syrian Pounds as GDP raised from 143.9for 2005 to 1640.6 Syrian Pounds for 20072 increase rate about %14.6, while the increase in the tax collection output for 2007 amounted to about 47 billion Syrian Pounds or an increase rate %128.7 over 2005. The actual tax collection output increased, in general, from 26.7.8 billion Syrian Pound in 2005 (Decree No.197 dated 6/5/2005 for reducing cars customs tariff came into effect on 1/6/200500 ) to 28.580 billion Syrian

2 Latest and real statistics of the Central Bureau of Statistics

17

Pounds in 2007. That means, the increase amounted to about 2 billion Syrian Pounds in one year.

A Comparison of the results of some taxation systems in the world. • By comparing the Syrian taxation system with the taxation systems in

some advanced countries and Arab countries in term of the rate of tax collection output to GDP, we find the following:

Table 13:

Country tax collection output to the GDP

Sweden 37.4% Denmark 49.1% France 27.2%

Germany 22.3% UK 29.8% EU 26.6%

USA 3 18.4% Morocco 21.1% Tunisia 21.3% Jordan 19.6% Egypt 19.5% Syria 18.1%

Syria aims at raising the share of the tax output to GDP within the limits of %25 over the coming years.

• Income tax rates Table No. 14

Country Tax rates on Companies Tax rate s on individuals

Sweden 28% 0-25% Denmark 28% 5.5-30% France 33.3% 0-48%

Germany 25% 0-42% USA 15-35% 10-35%

Morocco 35% 0-42% Tunisia 35% 0-35% Jordan 15-35% 5-25% Egypt 20% 0-20% Syria 0-28% 0-28%

3Resource : Congress Bureau for information and budget CBO year 2007

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• Tax output and the individual share of taxes Table 15:

Country Incoming tax in Billion Euros

Individual share of the tax in Billion Euros

Sweden 107.71 11952.6 Denmark 102.12 18871 France 465.12 7439.7

Germany 501.08 6073.6 UK 533.71 5861.3 EU 2877.32 5861.3

USA 1846.8 6230.5 Morocco 10.015 305.8 Tunisia 4.948 495 Jordan 2.004 352.9 Egypt 12.9 163.3 Syria 4.5 250

• Structure of the tax revenues distribution Table 16: Country Direct tax % Indirect tax % Other taxes Total Sweden 39.3% 33.8% 26.9% 100%Denmark 62.5% 35.6% 1.9% 100%France 27.1% 36% 36.9% 100%

Germany 26.6% 31.3% 42.1% 100%UK 45.4% 35.8% 18.8% 100%EU 31.1% 39.1% 29.8% 100%

USA4 58.06% 5.2% 36.74% 100%Morocco 39.4% 43.6% 17% 100%Tunisia 36.4% 57.1% 6.5% 100%Jordan 16% 66.7% 17.3% 100%Egypt 49.4% 36.4% 14.2% 100%Syria 57.63% 18.92% 23.45% 100%

These indicators confirm that the Syrian taxation system keeps pace in the other countries systems and is endeavouring to keep up the International Standards.

4 � The data from 2007 other countries data are for year 2005

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C- Main axes for developing the Syrian Taxation System The taxation system is considered as the essential source for the state revenues treasury and the main funding for expenditure. In addition, it is relied on to make up for the oil revenues and the surplus of the governmental economic institutions as there two sources fro revenues witness a big regress. Among the taxes for competing the reform of the Syrian taxation system, the following can be mentioned:

1- To continue the efforts for fighting tax evasion: Many hidden taxes were discovered out of which the increase in tax output came despite the cut of fee and duty rates

2- Adapting sections for senior tax payers relying on the principle of confidence and self- estimate and offering the best services for them because they contribute about %70 of the total tax output

3- Completion of the reform of the taxation department, and establishing an independent committee that steer several taxation departments in the Ministry of Finance. This will provide flexibility for the taxation action. Tax payers will also be arranged as senior, medium and junior tax payers depending on the size of taxes that they pay. This will help concentrate more on senior and medium tax payers.

4- To continue to simplify the procedures and transparency and to limit routine: At the same time, work will go on to train the personnel of finance departments. This will help offering the best services to the citizens with the best and easiest ways.

5- Introducing the value added tax stating from 2009 provided that the necessary arrangements and preparations, including the readiness of the Syrian economy, are completed beforehand

6- Ministry of Finance, through the financial policy instruments, is exerting efforts and will remain ready to use the financial policy instruments to limit inflation and price raise

D. Tax incentives granted according to the regulations of the investment encouragement decree No.8 dated 2007 The Legislative Decree No.8 dated 2007 for encouraging investment, that the licensed projects are subject to the principle of dynamic tax discount according to the Legislative Decree No.51 dated 2006 governing the income tax.

� The highest tax rate for project will reach %28 on net profits � Joint stock companies that have shares at a rate less than %50 will have tax

rate of %14' The projects which are involved in the laws of investment encouragement will have a tax rate of %22. This rate is cut down according to the following:

• Two degrees5 for the industrial establishments founded in the governorates (Raqqa, Deir Ezzor, Hasaka, Idleb, Swayda, Dar'a, Qunitra)

• One degree for the industrial establishments that employ 25 workers and more duly registered by the social insurance.

5 (Degree = 1%)

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• Two degrees for the industrial establishments that employ 75 workers and more duly registered by the social insurance

• Three degrees for the industrial establishments that employ 150 workers and more duly registered by the social insurance

• One degree for the establishments founded within the industrial cities • Two degrees for the industrial projects licensed by the regulations of Decree

No.8 dated 2007 in Hassia and Deir Ezzor (two industrial cities) • Two degrees for the power generating projects, projects of alterative energy

sources, fertilizers factories • Two degrees in the light of having any of the following:

- Industrial projects which rely in production on the local primary materials. This

will be determined by an organizing decision issued by the Ministry of Finance following an agreement with the Ministry of Industry

- Industrial projects that save energy consumption. This will be determined by an organizing decision issued by the Ministry of Finance following an agreement with the Ministry of Electricity

- Industrial that use instruments, means and machinery that preserve the environment and prevent environmental pollution. This can determined by an organizing decision issued by the Ministry of Finance following an agreement with the Ministry of Environment

- Industrial projects that export %50 of their production. by an organizing decision issued by the Ministry of Finance following an agreement with the Ministry of Economy & Trade

• Two degrees for the investment project licensed by the regulations of Decree No.8 dated 2007 in the eastern region, which include the governorates of (Ar raqqa, Deir Ezzor, and Hassaka)6.

6 Granted according to the Prime Ministry’s Decision, in its session held on 26/2/2008

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Chapter 2- Investment Environment

1- Improvement of the investment environment in Syria

The Syrian Government is committed to its general reformatory policy and to accelerating the move to the "social economy" exerting efforts to improve the economic conditions including of business performance within the context of the economic reform process the features of which became distinct confirming the soundness of trend and the importance of the objectives. The Government is determined to achieve success under the patronage of the President Bashar Al Assad.

Reform, as a transitional condition, has required the provision of legislative and institutional environment to create an investment framework that can meet the expectations of the local, Arab and Foreign investors over the last years, a number of legislations was issued to activate the capitals through organizing and facilitating the procedures of implementing investment projects.

The 10th five year plan defined investment as a national economic target to be driving force and a compass for the sustainable development plan as a means to increase growth rates and promote the standard of living for the society. Incentives were made available for various sectors and activities confirming the role and performance of the private sector in the success of development plans depending on the availability of the components of the attractive environment.

Concern was concentrated on improving the Syrian investment environment through developing the legislations required, diversifying investment incentives and guarantees, sharing the private sector in the development process, creating flexibility in the labour market, financing small and medium size projects, continuing the development of the necessary and price acceptable infrastructure, enhancing the new economy by accessing IT technology and communications, making a change in the investment culture for supporting opening and the adoption of change, concluding bilateral, regional, Arab and international agreements, establishing off-shore zones and new industrial cities developing the existing one, and enhancing participation and transparency. Programmes were continued to cut down the rates of unemployment….etc, The most important features of the Syrian investment environment

o Remarkable geographical location which forms the junction of a three continents

o Stable and safe political structure and the witnessed national intimacy. o Limited external indebtedness, fixed exchange rate against foreign

currencies over long years. o Advantages, exemptions, facilities and guarantees for investment projectso Adequate infrastructures, equipped and developing industrial areas,

qualified human resources and low wages o Availability and diversity of natural resources and low production costs.

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We need to assure in this context on the following main factors: o Syrian's membership in the trade and economic Arab and international

organisations. � Arab league � Arab Free Trade Organization � CAEU(Council of Arab Economic Unity) � Arab Association for investment guarantee � UNIDO � UN � UNDP � Islamic Conference Organization � Islamic Bank for Development � W.B � IMF � ESCWA � OECD � ANIMA � MIGA Syria became member in July 20027

� ICSID offering facilities to settle investment disputes between the foreign investors and the host countries.

� Syria has applied to the membership of the World Trade Organisation. - Syria is now ready more than anytime before to launch in the local and foreign

investment and to encourage the private sector participation and for the common investment culture, therefore, it started developing the tools of encouraging investments through improving the institutional capacity, and founding comprehensive strategy for the FDI that pass all of the incentives and the industrial cities to include the provision of the facilitations and sufficient information and the commercial banks which are able to compete with others and dispute resolution systems… etc, and working on promoting for potential investments, and facilitate the coordination between the different in charge and investment concerned parties through out “SYRIAN INVESTMENT AGENCY”.

Building sound economic structure suitable for business and adopting the basic

methods used by the effective policies to encourage investment (building the image of modern Syria, and targeting the investor and the sector….etc).

7 MIGA (Multilateral Investment Guarantee Agency: founded in 1988. it encourages the investment in the developing countries through offering indemnities to the foreign investors against the non-trade losses. It also provides the technical support that helps the developing countries in enhancing the investment opportunities, and employs its services to reduce the potential obstacles in the way of the investment.

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- A comprehensive tendency for positive change that prepares for a bigger momentum and acquires an increasing support at various economic media and activities accompanied by optimism that Syria is capable of facing the challenges and keeping pace with the emerging developments making use of its heritage, long history, rich resources and the leading mentality of its leadership and people.

- The Government's follow-up of its programme for the economic and social reform and the improvement of the investment environment as well as the participation of the Syrian society with its various groups in the decision making process and the economic matter.

2- The most important economic and political developments that positively

affecting the investment environment during 2007. The following events had positive effects on the investment environment

• The visit paid by the President to Turkey and Iran and the promotion of

political and economic relations to a remarkable level • Continuity for enhancing Arab, regional and world relations and concluding

several agreements • Development of diplomatic relations with Iraq • Arab incomes increasing the growth, especially, oil and gas incomes

Also the following events had its bad effects:

• Security and political conditions in Iraq, and occupied Palestine • Continuity of external pressures on Syria due to its stable and principle stands• World raise in the prices for some goods and services (oil, gold, metals,

wheat, corn, and fodders)

Since President Bashar Al Assad held his constitutional term of office in 2000, many changes took place which have reflected his determination to merge Syria with the world economy with gradual and steady steps towards economic reform, modernization and adopting the principle of the social market together with allowing an increasing role for the non-governmental institutions, increasing political participation, forming of new parties. This, represented positive signs for the investors and money holders on a local, regional and international level. Syria has enjoyed in general a stable investment environment as for the macro economics factors, with a clear improvement in growth rates. The inflation pressures disappeared, a reasonable internal and external trade balances and comfortable reserves of hard currencies achieved, besides to the stability of the Syrian pound measured by the international factors related to risk and economic freedom. Data of the Central Bureau for Statistics refers to a real growth in GDP with amount of (5.1%) in 2006, which rose to (6.5%) in 2007. The declared Tenth Five year Plan (2006-2010) aims to achieve optimistic goals, which it concentrated on launching a number of national programmes for developing and encouragement investment and the export.

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Syria have started with a big steps on the way of liberating the economics by entering "Arab major free trade zone" in addition to conclusion a number of mutual free trade agreements. The developments included below refer to the reformative tendencies, which the government follows:

• The ninth regional conference of Socialist Arab Ba'ath Party adopted officially the concept of "socioeconomic market".

• Before that, the national industrial conference held in 2005 reflected a new trend of the government, which it combined the industrialists of the private sector and the government to discuss the obstacles which the investment faces, and to propose ideas for developing the private industrial sector. The meeting led to a series of decisions such as canceling the custom fees on all the raw materials and other production inputs, repealing the consular fee on importing and exporting, reducing all ports charges with a rate of 25%, and reducing the payments of the employer related to personnel health insurance... etc. The second national industrial conference anticipated to be held on May of 2008. Syria also hosted a number of important economic conference and events such as the second expatriates conference and national forums for other sectors such as money, investment, real estate, tourism, transport, information, communications and others.

• On July of 2005, Syria launched the national report of human development in cooperation with UNDP, which is the report that suggested the socioeconomic market as an economy, which makes the man an ultimate object for all efforts, and insisted on the states commitment on limiting the poverty.

• The economic reform programme emphasized on the investment and monetary sector reform (opening private banks, liberating the interest rates, liberating money exchanging, unifying exchange price, insuring the full convertibility to the Syrian pound, opening Islamic banks and private enterprises of insurance, and finding a market for stocks), in the financial sector (reducing the income tax, applying the sales tax to compensate the gradually recession in tax and custom fees revenues), in addition to reforming the juridical system, continuing in corruption control, liberating foreign trade, reducing the bureaucracy and administrative obstacles, and achieving the effective participation of private sector as a real partner in development process.

The first step in any economic reform process to liberating the investment is through

providing the legal framework suitable for investment and trade, by reforming the current laws or by issuing new laws and finding the required institutions for developing the legislation and regulative procedures. Syria witnessed a series of such procedures; we include the most important ones:

• Issuing the legislative decree No.60 of 2004 related to abolishing expatriation fee. • Issuing of Law No.5 of 2005 related to Syria approving on joining the international

agreement of fighting terrorism finance. • Unification of exchange price which Syria applies on the imports and which was

divided on three prices, Syria also reduced the internal interest rates twice through 2004 for the first time since 1881, and permitted opening accounts in the foreign currencies.

• Issuing of Law No.23 of 2000 "Monetary and credit council" for supervision on monetary issues and bank regulations.

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• Issuing Law No.28 of 2001 which opens the banking sector for the private sector.

• Issuing law No.29 of 2001 related to the banking secrecy.

• Repealing Decree No.33 of 2003 of law No.24 of 1986 and its amendments included in Law No.6 of 2000, which are the Laws restricting the dealing with foreign currencies and considering as obstacles which were faced the foreign investment in the country.

• Issuing of Law No.59 of 2003 related with money laundry, so agency of controlling money laundry (ACML) has been founded.

• Issuing Decree No.55 of 2006 which includes the establishing of Damascus Exchange Market (Borssa)

• Legislative Decree No.35 of 2005 permitted the establishing of Islamic banks in Syria.

• Issuing of Decree No.43 of 2005, which opened the door of insurance, sector for the private investment, and previously the door of health and high education opened for the private investment.

• Issuing Decree No.51 of 2006 which includes the amendment of income tax Law No.24 of 2003 to reduce the income tax to encouraging levels.

• In 2004, civil first instance court has been established (room No.2) in all governorates to look in the lawsuits related to the disputes generated from the investment law. These courts have been directed to resolve the actions without any delay.

• Issuing of Law No.25 of 2006 which includes the Tenth five year plan with its ambitious aims.

• Issuing of the legislative decree No.60 of 2007 which includes the making of government exchange market.

• Issuing of the legislative decree No.38 of 2007 which includes the certification of the financial agreement of settling the indebtedness with Romania.

• Issuing of the legislative decree No.61 of 2007, which include the permission for the companies to re-evaluate their fixed assets and integration.

• Issuing of Law No.41 of 2007 which includes the making of a general authority for taxes and fees.

• Issuing of Law No.9 of 2007 which includes the certification of the agreement of establishing the Syrian-Qatar enterprise for investment.

• Issuing of legislative decree No.9 of 2007 which includes the formation of Syrian investment agency.

• Issuing of decree No.8 of 2007 for encouragement the investment.

• Issuing of Law No.36 of 2007 for trade which cancelled the decree No.149 of 1949 and its amendments.

• Issuing of Law No.32 of 2007 which permits the non Syrian investors, who are the owner of projects licensed by Law No.21 of 1958 in the industrial cities, to own and lease lands and real estates required for their projects for an area more than the defined property line provided that using it for the projects objects exclusively.

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The most important reforms made for liberating trade and encouraging exports:

• Signing a number of bilateral free trade agreement (with Turkey, Tunisia, Yemen, Egypt, Iran, China, Jordan, and the countries of Gulf cooperation council… etc.), and forming or activating the high committees joined with a number of states.

• Planning for establishing a special economic zone (Agro polis) at Al-gab plain to invest, produce and export the agricultural products of high efficiency and competitive quality.

• In 2003, the executive instructions of the new law regulated the free zones issued, which permits the investment in all services types in addition to industrial and commercial activities in these areas.

• Establishing the industrial cities at the governorates of (Damascus country side, Homs, Aleppo) and issuing the decree of establishing four cities at Deir ez zour.

3. Future vision of the investment environments. The tenth five year plan of the state (2006-2010) emphasized on the following strategic objects:

o Encouraging the FDI to enter the Syrian market. o Facilitating the running of investments and promoting long term

investment. o Increasing the wise management and transparency of fiscal institutions

and relevant state departments. o Increasing the number of products and services. o Completing the establishment of stock market, and providing the

legislative and institutional framework for papering the fiscal assets. o Providing the occupations and fiscal and consultative services required

for the prosperity of financial sector. o Amending the investment encouragement law and labour law. o Forming special courts for investment and trade disputes. o Promoting the FDI.

The tenth five year plan forms a source for the state to draw the policy of Syrian investment agency and the future vision. The plan adopted an optimistic scene for achieving the following objects:

- Average growth rate for GDP (7%) - High contribution rate of the FDI and the domestic private sector in

GDP. - Creating job opportunities with the limits of (1250) opportunities

annually. - Reducing the unemployment rate to (8%). - Reducing the rate of population under poverty line to (7.12%). - Increasing the foreign direct investment rate to (2.9%) of the GDP. - Increasing the private investment rate to (47%) of macro investment.

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The plan emphasized on increasing the production and raising the level of productive capabilities to enlarge the returns and get benefit of the achieved level for enhancing the competitiveness and providing services with a distinct qualitative level. So, the plan has depended on a number of bases in the specializing of the resources and allocating the investments on the sectors to achieve the aimed growth of the tenth five year plan such as: - Emphasizing on the priority of investment at promising sectors that can achieve quick returns and lead to wide benefits with encouraging the development of the infrastructure to fulfil the industrial and productive requirements of high returns. - Emphasizing on the role of manufacturing industry in the continuous economic growth process, providing job opportunities and improving the trade balance. - Insisting on the necessity of increasing the investment at education and health sectors and in field of technological and scientific development and research. - Promoting the entering of private investments to the fields of communications, information technology, tourism, transport, building and constructing, energy, manufacturing industry and agriculture and working on setting multi patterns for the investment through the partnership with the public sector or the foreign capital. - Providing more reforms for enhancing the investment environment suitable for attracting the Foreign Direct Investment (FDI) and facilitating the environment of businesses for the national private sector. - Adopting decentralization, enhancing the local administrative and economic systems and running the public interests with a high capacity to insure the success of regional investments. - Working on increasing the national savings rates through the insuring of macro economy stability and the developing of capital and fiscal market. - Working on increasing the production and the productivity through the promotion of using the low costs suitable technology to develop the small and medium planets sector to increase its contribution in the economic growth.

4. The legislations regulated the investment in Syria: There are several laws governed the policies of investment, license and investment encouragement s in Syria, such as:

1. Law No.47 of 1952 related to small industries and handicrafts. 2. Decree No.103 of 1952 related to the financial exemptions of the industrial projects. 3. Law No.21 of 1958. 4. Decree No.10 of 1986 related to the investment in agricultural projects. 5. System adopted by the Ministry of Oil for granting the investment for the oil

companies. 6. Decision of Tourism high council No.186 of 1985 related to the tourism investment. 7. Decision of Tourism high council No.198 of 1987 related to the tourism investment. 8. Credit and monetary law decreeing the licensing of the private banks. 9. High education law decreeing the licensing of private universities.

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10. Ministry of education decisions decreeing the licensing of private schools. 11. Law of general authority of free zones related to investment at the free zones. 12. Decree No.8 of 2007 for promoting investment.

5- Institutional Capacity building: Issuing of legislative decree No.9 of 2007, forming the Syrian Investment Agency, formed the institutional and organizational frame work of the investment in Syria, which turns the entity of the investment office to an administrative and financial independent agency which has a big role in developing the work mechanism, simplifying the procedures, providing the facilities and encouragement s to the project and raising the promotion of investment. In the light of the tasks assigned to it, the agency devoted on achieving its new organizational structure, and arranging its internal management home according to a wide vision of serving the investors and the investment. It continued in its adopting of the open door policy and working on developing its numeral cadre and increasing the personnel number from 25 to 100 worker. The investment agency takes an official horizontal organizational structure led by the management board and the general manager. Its structure branched to six directorates:

o Financial and Administrative Affairs directorate.

o Legal Affairs directorate.

o Monitoring and Technical Affairs directorate.

o Investor care and the One Stop Shop directorate.

o Promotion and Public Relations directorate.

o Planning and Studies directorate.

The agency started seeking a better help from a number of authorities and organizations of training and rehabilitation the human cadre working in the field of investment, organizing joined events and activities, transferring the scientific knowledge and comparing with the model practices and getting benefits of them. With its launching early of 2007, the agency made a number of procedures to develop its role and functions towards simplifying the procedures and overcoming the administrative hindrances such as:

� Authorizing the investment high council with a number of tasks which were assigned to it pursuant to the rules of investment law No./10/ of 1991 to the agency management board to make its role and tasks in a quick and flexible way which serves the investment process.

� Admitting all license applications submitted to the agency and cancelling the work with the activities lists, which do not deserve the advantages and exemptions of the investment encouragement law and presenting all the application to the management board for determination.

� Briefing the license application to 2 pages and dispensing the feasibilities application of the typical projects.

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� Defining the developing areas stipulated by the legislative decree No./8/ of 2007.

� Holding periodical meetings to the "investment family" as a mechanism to open the channels of coordination, dialogue and ideas deduction, and it joins all concerned parts and investors care office over all directorates.

� Preparing the project of one stop shop mechanism, which defines the procedures and the required time to finish them and their achievement destination.

� Preparing a promotion plan for 2008 and allocating its required credits. � Carrying out the project of internal system and personnel system of the

agency. � Authorizing the industrial cities councils (Adra, Hassya, and Al-sheikh Najjar)

with issuing the license decisions and their amendments and monitoring their procedures.

� Issuing the circular of the Prime Minister decreeing the joining of investment agency in all activities held by the ministries and other parties in the field of investment.

� Issuing the circular of the Prime Minister, which considers the Syrian investment agency the concerned party, of approving for organising the conferences, forums, workshops and other events related to promoting the investment except the one of tourism sector.

6- Enhance the Investment Environment Project: The most important executed activities of EIE project, which is implemented in cooperation with the SIA, SPC and UNDP early of the second half of 2006, are the following:

• Organizing training courses in English language for the agency staff. • Building the IT infrastructure, activating a comprehensive IT network and

modern communication network, and installing office computer sets for all agency staff.

• Implementing training courses in the information skills for all the agency staff according to their requirements and charges. Most participants obtained ICDL Certificates.

• Building Information Management System, which includes new database (statistics or archive software) for the investment projects and information related to them to support the decision maker, providing statistics and automating the work mechanism at the agency (accomplished 80%).

• Updating the website of the agency, setting up the tools for managing and developing the site and its information in a simple and practical way, and training a cadre of the agency for this task to insure the continuously updating of the information shown on the site.

• Issuing the primary edition of the investment map which includes the available investment opportunities according to the sector and the region, a new web site designed to make all this information available on the internet and linking it with the agency web site.

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• Establishing an electronic library contains currently 89 documents which include reports and local and international studies in the following fields: economic, promoting, legality, statistics, in addition to the documents of the tenth five year plan, to provide the references and information which help the agency staff in preparing reports and studies. The work will be continued in enriching this library.

• Participating in a comprehensive training course which lasted for five weeks and exposed to all legislative and legal issues related to encouraging the investment and achieving the aimed objects of drawing the investments of local private, regional and international sectors. (Held by IDLO).

• Organizing an intensive workshop and training course lasted for five days for enhancing the vocational capability and the institutional structure of the investments promotion systems in Syria in cooperation with the Arabic planning institute in the state of Kuwait.

• Providing a study of proposing an institutional structure for the SIA according to the global criteria as it is presented before by the MIGA affiliated to International Bank.

• Implementing a Corporate Image (promotional logo) and identity for the agency by a specialized designing company.

• Implementing training courses in the following fields: o Customer Care o Management Skills o Project Management Professional o Entrepreneurship role in the development process o Process Management o Marketing Techniques o Communication & Negotiation Skills

• Holding a workshop for discussing the challenges, which face the FDI to Syria.

• Executing the works of rehabilitation the electricity network and maintaining the generator.

• Commencing the implementing of promotion strategy.

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7. Investment promotion: The government paid its attention to support the promotion plan and marketing the investment opportunities. So, the last year witnessed a clear improvement in the executed promotion activities, which reflected the certain desire in providing a business environment more suitable for investment. So, Damascus became a capital and pole in hosting conferences, events, exhibitions, forums, seminars, workshops... etc., following the most important promotion events which the SIA participated in 2007: Table No.(17):

Location Participants from SIA Activity

Damascus 5International forum of investment and financial institutions 21-22/11/2007

Damascus 1First international conference of micro funding 10-11/11/2007

Damascus 1Wise management of banking sector workshop 12-13/11/2007

Tunisia 1Carthage investment conference 20/10/2007

Kuwait 2Syrian investment forum in the state of Kuwait

Qatar 2Qatar investment forum 8-9/6/2007

Aleppo 3Spanish Syrian businessmen forum

Turkey 14Turkish Syrian businessmen forum

Damascus 4Second expatriates conference

Damascus 10Training course for promoting in cooperation with Arabic planning institute in Kuwait

Jordan 1Coordination committee meeting of OECD states

Egypt 1Ministries meeting of OECD states

Damascus 6Syrian Egyptian meeting within the framework of cooperation protocol singed in 2006

Yemen 2Yemen Syrian meeting within the framework of cooperation protocol between the two countries

Cairo 3Cairo investment forum 9-10/11/2007

SIA 8Training course in developing management skills and customer care

Damascus 22Internal training courses (language, networks, IDCL)

Damascus 3First business and Asia Arab investment forum 27-28/11/2007

SIA 33Workshop (investment and legislations)

Damascus 3Orientation workshop of the international bank 18/6/2007

Damascus 5Emirate Syrian businessmen forum Greece 2Workshop of Greek Arab chamber of commerce (Greece and

Arab countries continuous cooperation). Berlin 2German Arab economic forum SIA 58Customer Care offices meetings Damascus 3Workshop for discussing Agro-polis project at Al-gab area

195 Total participants

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Syria is heading, studied steps in the different aspects of investment, the Arab competitiveness report, issued from the global economic forum, mentioned that Syria occupies distinctive positions worldwide out of /128/ states according to strength points indexes in the Syrian economy, the most important are:

• Rank (20) in security and stability index, which is one of the most important factors of drawing the investments worldwide.

• Rank (45) in heath and primary education index.

• Rank (43) in the availability of engineers and scientists index.

• Rank (22) in real effective exchange index.

• Rank (73) in the general debt index according to the gross production.

• Rank (24) in the credit and debit interest index.

• Rank (39) in woman private sector employment index.

• Rank (21) in the index of controlling the world allocation of global markets.

Syrian Investment agency set up its promotion ambitious plan of 2008 by getting

benefit of UNDP and through the Enhance the Investment Environment project, the plan tends to get more benefit of the competent promotion programmes and the tools provided by the Euro-Mediterranean network for ANIMA, MIGA, ESCWA, OECD, Arab Investment Guarantee Organization, Kuwait Arab Planning Institute, and ICIEC the member of the group of Islamic bank for development. The agency implemented several central workshops; the most important ones were that addressed the new investment legislations, and collecting and using the data of FDI. In cooperation with all our embassies outside and through the Syrian Foreign Ministry, the new investment legislations prints were distributed in addition to CDs. These embassies made their role in conducting meetings and forums for the investors, businessmen and expatriates outside, in which they explained the opening and development occurred on the different fields especially the economic ones. They agency also started developing the prints and leaflets distributed on the foreign and Arab embassies in Syria in addition to our embassies outside and the local, Arab, International businessmen. It also made a radical development to the agency website, in addition to linking the Internet which became available for all agency staff. A new logo distinctive logo was designed for SIA, and it released it on the suitable prints and means. Work is still going on developing the national investment map, besides that there is a position for Syria within the Arab investment map which combines about (4000) investment opportunities classified according to the sectors, and contains about /15/ Arab states and about /20/ Arab agency.

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This map has been published on the Internet at www.arabinvestmap.com. This site included a lot of information useful for the investor such as Arab agreements in the field of investment, regional economics situation, investment laws and others. The agency works hard to establish strong relation and joined cooperation links with different peer agencies in different Arab an world states for exchanging information and experiences and paying more attention to upgrading the level of the promotion process in the method, organization, management and the material and human capabilities. The agency singed a number of agreements with its counterparts in other countries to exchange experiences and deep cooperation (enclosed a list of the agreements in this report appendix). It worth mentioning that the cooperation of local official and private mass media was distinctive and clear which convoyed, and still, the situation of investment environment development in Syria. After the making of investment agency, preparation is proceeding to adopt a distinctive professional dynamic methodology to apply it on all investment encouraging activities (building the state image, searching and serving investors, promoting investment policies), and remembering always that the investors became more selective in choosing the investment locations and more persistence on the accurate information and decent treatment, this done through:

� Maintaining the competitiveness privilege through the distinguished factors (promotion product qualities, supplement investor care, desired picture and reputation, modernization, and harmony), also through prompt response (in the field of adaptation with changes and applying new procedures), reducing business practices costs which increases the economic added value and market growth, and through the best using of information technology and update communications to get full benefit of all electronic promotion methods.

� Communication is a key advantage which must be depended on in building links between investment agency and public sector authorities dealing with investment matters to avoid bureaucratic interventions among the government managements concerned with investment and which are considered a basic element in building a positive picture of the agency, and also in building confidence, enhancing coordination and facilitating main tasks for customer care through all stages, especially the stage after submitting the investment application.

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Chapter Three: Investment under the umbrella of investment law No.10 of 1991 and investment

encouragement decree No.8 of 2007 Syrian Investment Agency was made pursuant to legislative decree No./9/ of 2007 accompanied with the issuing of investment encouragement decree No./8/ of 2007 which superseded investment law No./10/ of 1991 and its amendments. The agency has been charged with new tasks and authorities fitted with the economic developments which Syria witnesses. To view the status of monitoring the investment projects covered by the legislative decree No./8/ of 2007 of investment encouragement, following, we can review the harvest of 2007. The analyzing of the licensed investment projects data shows that the horizons of investment in Syria are still wide and the investment opportunities are still promising and profitable. The investment high council has conducted three sessions through 2007 after the authorizing the management board of investment agency of discussing and issuing license applications approvals and modifying the investment projects. So, according to decree No./9/ of 2007 decreeing the making of SIA, the functions of investment high council became restricted to the following:

1. Setting up the strategies and general policies of the investment in SAR. 2. Considering the laws and regulations related to the investment. 3. Approving the project of SAR investment map. 4. Studying the reports of monitoring the implementing of licensed

investment projects and evaluating the results of the agency action. 5. Issuing the special regulations related to the agency action according

to the proposing of management board. 6. Discussing subjects submitted to the agency by the management

board and resolving them. Since its forming in the third month, the management board of SIA has conducted /18/ sessions in which it approved on licensing (186) projects of different economic sectors. The industrial projects possessed alone a great share of them, which reached to (104) projects, agriculture (28) projects and the transport projects (52) projects, in addition to (2) projects for different activities. On other hand, the total value of estimated investment costs of these projects reached to (401.1) billion Syrian pounds (including the Holding Qatar Syrian company with the capital of SYP 250 billion), some of them are with foreign currency (131.1) billion SYP, achieving by that the investment costs rate of these projects, which is (26.8%) out of the total value of the investment costs of all licensed projects since the issuing of investment law in 1991. The value of the imported machines and equipments of the same year, which reached to (SYP 107.8 billion), formed in its rate about (16.3%) out of the total values of the machines and equipments imported over the years of (1991-2007). Regarding the direct job opportunities expected from these projects, they have been reached on 2007 to (14315) direct job opportunities.

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Table 18: Licensed Investment Projects by Law No.10 of 1991, and the Legislative Decree No.8 of 2007 according to the years, Economic

activity, Investment costs, the imported machinery and the labour used during (1991-2007)

No’s of licensed projects by economic activity Investment Costs

In Billion SYP Years

Industrial Agriculture Transportation Others

Total Investment

Costs In

Foreign exchange

Machinery and

equipment value

(bln SYP)

Job Opportunities

1991-1995 231 8 262 3 504 68.6 50.5 34.1 34736

1996-2000 169 3 206 3 281 56.3 45 26.9 17289

2001 117 6 210 1 334 29 23.3 14.9 10309

2002 88 4 375 0 467 41.5 23.1 20.4 11783

2003 87 15 131 2 235 26.5 20.4 13.1 8812

2004 212 18 182 3 415 135.8 101.5 77.1 26104

2005 215 28 283 8 534 267.3 187.4 122.1 48309

2006 353 66 282 5 706 469.8 347.6 245.9 46741

2007 104 28 52 2 186 401.1 131.1 107.8 14315

Total 1576 176 1983 27 3762 1494.8 929.9 662.4 218398

Percentage 2007% 6.6 15.9 2.6 7.4 4.9 26.8 14.1 16.3 6.6

Resource: SIA data

010

020

030

040

050

060

070

080

0

1991-1995

1996-2000

2001 2002 2003 2004 2005 2006 2007

Graph 4: Law No.10 of 1991 and LD No.8 of 2007 licensed projects increasing number by sector and years

others

transportation

agriculture

industrial

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It worth noticing here, that the Syrian-Qatari holding company has been established at the end of 2007 with a capital reached to (250) billion SYP.

• The issuing of any new legislation of investment encouragement, will be accompanied with a period of waiting by the local and foreign investors until all the advantages of this legislation becomes clear in their minds, and this what has happened also through the experiences of the like states.

• The issuing of investment encouragement decree and the agency formation decree came at the end of the first month of 2007, the forming of the management board in the third month, then authorizing it by the investment high council with the necessary competences in the fourth month, which means that the first third of these year is considered as a transitional period.

• In 2006, a number of large costs investment projects have been licensed such as the concrete projects, oil refinery and others… which contributed in raising the year production of gross investment costs, and which are a large projects rarely repeated in the economies of the similar states, consequently, it is unfair to compare the investment costs of the licensed projects with 2006 which formed an exceptional year.

• The issuing of the legislative decree No./51/ of 2006 of the income tax clarified the subjection of the investment projects directly to the principle of the dynamic tax discount throughout the project period, and cancelled the granting of tax exemption period (previously 5-7 years) which made some investors license a number of projects at the end of 2006 a provision to get benefit of the transitional period occurred between the issuing of Decree No./51/ and date of its implementation on (1/1/2007), so that, the licensed projects at this period get benefit of the advantages of the investment law No./10/ at the period of tax exemption and after that they will certainly get benefit from the rules of decree No./51/, which made their benefit more than the other, and which reflected the increasing number and size of the licensed projects in 2006 to reach in their gross investment costs to /470/ billion SYP.

Graph 5: Investment Projects' costs distribution for the licensed projeccts by Law No.10 /1991 and LD No. 8 /2007 by sector in year 2007 estimated in million SYP

Industrial 33298

Agricultural 3619

Oil & Energy 93673

Health 13856

Transportation 5695

Nationally250000

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Table 19: Volume of the licensed projects by legislative decree No.8 of 2007 by the economic activity, investment costs, imported machinery

and labour used for the year 2007

Projects Investment costs Job Opportunities Sector

QTY % Million SYP %

Foreign exchange

Value of machinery in Million

SYP Labour %

Industrial 92 49.5 33299 8.3 24963 17052 6654 46.5 Agricultural 28 15.1 3620 0.9 1749 1924 1051 7.3

Transportation 52 28 5695 1.4 4593 4659 2382 16.6 Oil & Energy 4 2.2 93674 23.4 92297 77666 730 5.1

Health & Medical 9 4.8 13856 3.5 7507 6517 3498 24.4 Others

Syrian –Qatari Holding Company

1 0.5 250000 62.5

Total 186 100 401144 100 131109 107818 14315 100 Resource: SIA data

Table 20: executed projects by Law No.10 and LD No.8 including the

Industrial Cities by the project’ type for the period 1991-2007

Executed or under execution Projects Years Licensed

Projects industrial Transportation Agricultural OthersTotal Execution

percentage

1991-2000 885 271 466 8 1 746 84.3

2001 334 63 210 2 2 277 82.9

2002 467 89 374 4 1 468 100.2

2003 235 76 131 8 0 215 91.5

2004 415 150 144 8 3 305 73.5

2005 534 132 66 11 5 214 40.1

2006 706 157 69 28 1 255 36.1

2007 186 72 1 2 1 76 40.9

Total 3762 1010 1461 71 14 2556 67.9 Resource: SIA data

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Graph 6: The percentage of the licensed to the executed projects by years

-1000 -800 -600 -400 -200 0 200 400 600 800 1000

1991

-199520

0120

0220

0320

0420

0520

0620

07

licensedexecuted

• The total investment costs of the licensed projects in (1991-2007) did

reach to (1494.8) billion SYP. • Transportation sector occupies the first position of the total licensed

projects during the period of 1991-2007 (1983) projects, whereas the industrial projects come in the second position by (1576) projects.

• There is a clear development in the number of industrial projects since 2000 and following, namely after the amending of law No.10 by the decree No.7 of 2000 which permitted the foreign investors to possess the land and the project, and to open bank accounts.

• It is noticed that the declared job opportunities are less than the real numbers, due to causes related to the evasion from paying the personnel social insurances (previously).

• About of 98% of these projects belong to the private sector, whereas the joint sector forms less than 2%.

Table 21: abolished licensing decisions according to the Law No.10 of 1991 articles by years, economic activities and the investment costs during the period 2000-2007 in million SYP

Industrial Licensing decisions

Transportation Licensing decisions

Other Licensing decisions

Total Years

No’s of projects

Costs No’s of projects

Costs No’s of projects

Costs No’s of projects

Costs

2000 44 936 0 0 174 2121 218 357 2001 147 3234 110 1165 0 0 257 4399 2002 43 1204 49 507 9 102 101 1813 2003 68 2023 114 1213 2 16 184 3252 2004 109 2507 372 4129 5 73 486 6709 2005 181 68596 411 22204 26 11068 618 1016862006 185 245451 280 18885 20 9552 455 2738882007 76 191815 78 4148 11 2778 165 198741Total 823 515766 1414 52251 247 25710 2484 593727

Resource: SIA data

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• The Reasons behind the cancellation of the licensing decisions: The executive instruction of the investment law No./10/ of 1991 stipulated on: (cancelling the license decision, if the project entrepreneur did not take the serious procedures to commence the execution during one year from the date of informing him the license decision…) consequently, what being cancelled are the license decision not the projects as the some believe, and during its action and monitoring of the non implemented projects, the agency founded that the reasons which stand behind the non implementation, which will be cancelled, can be defined in the following:

1) Free and easy obtaining of the license decision for any investment project without charging the investor with any cost, the cancelling of this decision will not affect the investor with any financial or procedural consequences.

2) The investor non ability of financing his project and his failure in obtaining funding loans from the banks due to several reasons such as his non ability of presenting the requested guarantees to the licensed banks.

3) Lack of serious and realistic study of the projects by the investor from the economic, technical and marketing aspects, which exposes him to non-expected obstacles.

4) Disputes occurred among the partners when they starting the implementation such as share allocating disputes, the company legal form, management and funding method…etc.

5) Some investors seeking for getting license decision for investment projects to trade them and searching for partners, taking into consideration that the investment agency could limit the trading with the license decision through legal ways and enlightening the investors when making any duly cession or partnership.

6) None considering the location on which the project will be established as for the land is suitable for this kind of projects. So, there are subjective causes prevents the trusteeship authorities from giving the necessary regular licenses, such as the cement or phosphor factories which are not permitted to be established on arable lands or near protectorates, lakes, residential blocks or tourist locations … etc. There are environmental conditions and conditions which the project needs such as the availability of necessary water, electricity and others.

First: Industrial Sector: A- licensed industrial investments:

It seems that the industrial sector has a promising horizon with the increasing of economic reforms in Syria, the flowing of private non local investment and the increasing spreading of the private sector banks required for funding. The industrial private sector has a special government attention because of its importance among all sectors. So, the tenth five year plan concentrated on it and the new legislations gave it the priority as it the strongest wheel in pushing the development process. This sector has maintained its growing with a logical way.

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The development occurred in the increasing of the licensed industrial projects is directly consistent with the increasing of the investment costs and securing more job opportunities. It is also accompanied by a development in the investment quality, size and geographical allocation. New important activities are still entering Syria such as power plants, and TV, car and concrete manufacturing, in addition to different projects in the oil services, health care, and others. Table 22: industrial licensed projects by the law No.10 of 1991 and LD No.8 by years, costs, and job opportunities during the period 2000-2007 in million SYP

Years No’s of Projects Investment Costs In Million SYP Job opportunities

1991-2000 400 95270 29792 2001 117 22689 6669 2002 88 34661 7677 2003 87 21139 6611 2004 212 121937 20205 2005 215 142570 24040 2006 353 325877 33716 2007 104 52779 10682 Total 1567 816958 139392

Resource: SIA data

The growing of this projects started to be characterized of gradual increasing with the beginning of new millennium, its growing ways increased through the last two years, where the total of the licensed projects during (1991-2007) did reach to about (1576) projects (except legally cancelled), out of them (104) projects licensed in 2007, achieving by that the rate of (6.6%) of industrial licensed projects total during (1991-2007). Table 23: The development of the licensed industrial projects by activity during the period (2007-1991) Industrial activity during

the years Engineering Food Chemicals Textiles Total

1991-1995 67 75 56 33 231 1996-2000 50 47 29 40 166

2001 47 14 21 35 117 2002 28 15 18 26 87 2003 34 20 16 19 89 2004 60 54 23 77 214 2005 43 79 29 66 216 2006 85 148 52 68 353 2007 19 44 25 14 102 Total 433 496 269 378 1576

Percentage % 27.5 31.5% 17.1% 24% 100% Source: SIA database.

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Food industries, packing and dehydration occupied the head of the industrial projects list licensed with the rules of investment encouragement law, for their number reached (496) projects, forming the rate of (31.5%) of the industrial projects total during (1991-2007), out of them (44) projects have been licensed in 2007 only. The technical development occurred in the food industries accelerate within the context of the international competitiveness and the wide diversity of food industries with vegetal and animal origin. This led to develop the production methods and applying the method of packing, boxing and wrapping and depend on the quality rules. The increasing number of packing, dehydration and manufacturing food materials projects is may be due to the government encouragement for this activity because of its major importance in serving the agricultural sector which is considered the base of Syrian economy stability and providing what this sector needs of the manufacturing, services, sorting and preparation necessary for the inside and outside marketing process. This activity is considered also as a complement of the agricultural activity which it secures the services of dehydration and manufacturing the food products of vegetables, fruits, citrus, and the animal products of meat, and dairy products, extends their validity and turns them to manufactured products which fulfil the need of the inside and outside market, and provides the farmers with the opportunities of selling their products, avoiding them the recession and product accumulation in the seasons. Besides that these industries are needed by the Syrian economy to achieve its food safety and increase its exports. These industries are distinguished with their low investment costs, speed turnover of their capitals, secured revenues and easy management, besides to their providing of more job opportunities. The next ,as for the numbers, are the engineering industries projects, which reached to (433) projects, then the industries of spinning, textile, fabrics, soft goods and garments which reached to (378) industrial projects, including the projects which have been licensed at the three industrial cities. This explains what this industry is characterized of experience and originality, whereas the raw materials for its successful are available, such as cotton, wool, and silk, in addition to the professional experience which the work hands enjoyed with in this field, besides to the opening of the new markets thanks to many agreements signed by Syria with different world states especially the European states to exempt textile manufactured goods from the custom fees and removing the quantity restrictions from them, which formed a motivation for the investors in this profitable industrial activity, and made some world companies heading to them (such as Peniton Company, NafNaf, Adidas, Keitry, Lord, Best mountain, and MG) and made others world fashion centres granting their trade marks to the Syrian products, which clearly shows the confidence of these companies in the quality of these products and in the ability of the Syrian manufacturer to deal with the best world specifications and market them successfully. The next, as for number, are the chemical, plastics and detergents industries which reached to (269) projects, achieving the rate of (17%). The entering of a large number of the investors to the industries which were limited to the public sector continued, such as power projects, electricity generating, and the industries of cables, TV, reinforced bars, metal plates, galvanization, rolling, concrete and others. The thing which supported these sectors and the policy of economic multiplicity in the industrial sector with new industries, which helped on widening the

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collection of the Syrian industrial products prepared for local marketing or for outside exporting, affected in our economy in general and the collection of our imports and exports in particular, and contributed in modernizing and developing our industries, transferring new technologies and very important commercial and administrative experiences and allowing more field for new job opportunities.

B. Implemented industrial investments: The feature of achieving industrial contraventions appeared in 2007, which the data referred to an increasing in the rate of implementing the industrial projects in particular to reach in this year to (69.2%) out them there are distinctive projects. The President of the Republic opened the factory of the Iranian Syrian Company for manufacturing cars Syamco at Adraa industrial city, and in December of the same year he opened the factory of Iranian Syrian company for (SAPA) cars at Homs with a productive capacity reaches /15000/ cars annually in its first stage, and Hama new concrete factory which its productive capacity reaches one million and one hundred thousand tons annually with a gross cost /250/ million Dollars. Experiments of operating the first projects of the private sector for sugar production started with the capacity of million tone annually, a factory for reinforced iron with a capacity of million tons annually, which secure (40%) of the country need, in addition to the factory of flat glass at Aleppo… etc., and from the aspect of implementing the industrial projects, the number of implemented projects or which take executive procedures (industrial license, partial industrial record, final industrial record) reached to (1010) industrial projects, including the projects of the industrial cities, achieving the rate of (64.1%) of the gross projects licensed during (1991-2007) which reached to (1576) industrial projects, in case of exclusion what have been licensed or implemented in 2007 which considered as new projects and the period of their implementation did not finish yet, so, the rate becomes (69%).

Executed or under execution Projects Years Licensed

Projects Industrial License

Partial License

Full License

Total Execution percentage

1991-2000 400 16 46 209 271 67.8

2001 117 15 21 27 63 53.8

2002 88 19 18 52 89 101.1

2003 87 9 29 38 76 87.4

2004 212 68 43 39 150 70.8

2005 215 70 28 43 132 61.4

2006 353 75 67 15 157 44.5

2007 104 47 19 6 72 69.2

Total 1576 319 271 420 1010 64.1 Source: SIA Data

It is worth, to mention that the investment law No.10 of 1991 and its amendments, and the investment encouragement Decree No.8 of 2007 have granted the licensed projects (except the current transport projects) a period of three years as an establishment period, which means that what has been licensed in 2005, their implementation can be monitored after the passing of three years from the date of its licensing.

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C. Other industrial investments: Table 25: Implemented Industrial Projects under the law No.21 of 1958 for the

years 2000-2007 in Million SYP

Activity Description 2000 2001 2002 2003 2004 2005 2006 2007No’s of Projects 102 100 119 123 127 140 117 131

Capital 749 726 929 502 599 951 3192 1752Engineering Industries

Labours 603 614 935 760 727 792 1455 935 No’s of Projects 149 159 162 175 207 247 246 162

Capital 1785 2082 1324 1463 2761 2496 5235 4622Chemical Industries

Labours 621 1363 1201 1119 1835 1604 2504 1491No’s of Projects 122 145 206 210 328 380 333 246

Capital 1147 1421 1260 1611 2580 2838 3415 2795Food Industries

Labours 578 1169 845 1342 1906 1724 1983 1442No’s of Projects 217 196 227 187 244 227 240 146

Capital 633 625 540 862 1220 1259 4331 819 Textile Industries

Labours 1001 1268 1263 952 1752 1773 1857 1247No’s of Projects 590 600 714 695 906 994 936 685

Capital 4313 4854 4053 4439 7160 7544 16173 9988Sub total

Labours 2803 4414 4244 4173 6220 5893 7799 5115Source: Ministry of Industry 2007 data Table 26: Implemented Vocational Projects for the period: 2000-2007

Industrial Activity No’s of Projects Capital in Million SYP No’s of Labour

Engineering 5583 2281.4 10951

Chemical 923 1065.9 2574

Food 1973 1291.5 4312

Textile 1125 545.4 3142

Total 9604 5184.2 20979 Source: Ministry of Industry 2007 Data

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Graph7: Investment Costs of the projects by governing laws

Vocations Law

Law No. 21 Investment Law

Graph 8: Projects distributions by the governing laws

Investment law

Law No.21

Vocations Law No 47

Second: Industrial cities: The industrial cities follow a speed steps towards achieving the objects which they have been established for. These cities achieved big success in achieving the time programmes in the fields of implementation and investments, and contributed clearly in drawing the local, Arab and foreign investments. The first stages of implementation have been finished at the three industrial cities (Adra, Hasia, and Al- sheikh Najjar), commencing the second stage at (Hassya, Adra) and the third stage at Al- sheik Najjar, net revenues of the three cities reached to /9.2/ billion SYP through the lands allocation and the investors building of the plants where the following factors recorded:

o The number of investors allocated with buildings are 5673 investors

o The number of investors received their buildings are 5322 investors

o The number of factories commencing their buildings 2343 factories

o The number of factories commencing production are 313 factories

o The number of Arab and foreign companies are 168 companies

o The number of workers in building the plants are 45229 workers

o The volume of factories investments under production 74 billion SYP

o The volume of factories investments under implementing 77 billion SYP

o The volume of allocated factories investment not commenced

45 billion SYP

The city of Deir Ezzour was established pursuant to the decree No./110/ of 2007. The city extends on area of /1260/ hectare, the detailed organizational surveys and diagrams were accomplished and their investment regulation was issued, the shareholders number of its industrial buildings were about (190) local shareholders to the end of 2007.

45

The number of the industrial projects licensed under the provisions of the Investment Promotion Law in the three industrial cities of Damascus countryside, Homs and Aleppo (whose boards of directors were delegated by the Supreme Council of Investment to prepare the inclusion decisions for the industrial projects to be established in them since early 2004) mounted to 156 projects during the period 2004-2007. The following is a review about the current situation of investment in the three industrial cities:

A. Industrial City of Hassya (governorate of Homs) Table 27: actual implemented licensed projects under the Investment law no.10

of 1991 and its amendments and the LD No.8 of 2007 in Industrial City of Hassya for the period 2004-2007

Executed or under execution Projects Years Licensed

Projects Industrial License

Partial License

Full License

Total executed

Execution percentage

Executed Investment

costs in millions

Job opportunities

2004 11 6 4 0 10 91% 16840 2630 2005 10 6 0 4 10 100% 2104 303 2006 33 7 0 1 8 24.2% 25214 2902 2007 11 5 0 0 5 45.5% 1852 449 Total 65 24 4 5 33 50.8% 46010 6284 Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 28: Licensed Industrial Projects distribution under the investment law in

Industrial City of Hassya by the Activity type during the period: 2004-2007

Years Food Industries

Textiles Industries

Engineering industries

Chemical Industries

Other industries Total

2004 4 1 3 3 0 11 2005 0 1 0 4 5 10 2006 8 1 8 15 1 33 2007 2 0 1 3 5 11 Total 14 3 12 25 11 65

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 29: executed investment plants in the industrial city of Hassya under the law 21 for the years 2004-2007 in million SYP

Activity Description 2002 2003 2004 2005 2006 2007 Total

No. of Projects 0 2 3 60 49 30 144

Capital 0 13 40 1326 1116 807 3302 Engineering industries

Labours 0 7 40 1127 843 376 2393

No. of Projects 0 1 4 32 22 33 92 Capital 0 5 12 856 270 629 1772 Chemical Industries

Labours 0 4 59 239 176 311 789 No. of Projects 1 3 1 38 10 16 69

Capital 35 139 70 394 454 691 1783 Food Industries Labours 4 29 40 312 201 269 855

No. of Projects 0 0 2 7 4 7 20 Capital 0 0 80 84 288 568 1020 Textile Industries

Labours 0 0 30 116 111 173 430

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No. of Projects 1 6 10 137 85 86 325 Capital 35 157 202 2660 2128 2695 7877 Sub total

Labours 4 4 169 1794 1331 1129 4431 Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

B- Sheikh Najjar Industrial City (in Aleppo Governorate)

Table 30: Actual implemented licensed projects under the Investment law no.10 of 1991 and its amendments and the LD No.8 of 2007 in Industrial City of

Sheikh Najjar for the period 2004-2007 Executed or under execution Projects

Years Licensed Projects Industrial

License Partial License

Full License

Total executed

Execution percentage

Executed Investment

costs in millions

Job opportunities

2004 21 0 11 2 13 61.9% 3322 1202 2005 17 0 5 2 7 41.2% 3389 984 2006 14 0 10 0 10 71.4% 8268 1266 2007 3 0 1 0 1 33.3% 773 134 Total 55 0 27 4 31 56.4 15752 3586 Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 31: Licensed Industrial Projects distribution under the investment law in

Industrial City of Sheikh Najjar by the Activity type during the period: 2004-2007

Years Food Industries

Textiles Industries

Engineering industries

Chemical Industries Total

2004 0 17 3 1 21 2005 0 11 3 3 17 2006 3 8 1 2 14 2007 0 1 1 1 3Total 3 37 8 7 55

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 32: Implemented Industrial Projects under the law No.21 of 1958 for the years 2000-2007 in Million SYP

Years No’s of Projects

No’s of Executed industrial Projects

Investment costs in millions

Job opportunities

2004 0 0 0 02005 795 6 11109 4394 2006 280 43 18426 1847 2007 560 56 8558 3558 Total 1635 105 38093 9799

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

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C- Adra’ Industrial City (In Rural Damascus Governorate0

Table 33: Actual implemented licensed projects under the Investment law no.10 of 1991 and its amendments and the LD No.8 of 2007 in Industrial City of

Adra for the period 2004-2007 Executed or under execution Projects

Years Licensed Projects Industrial

License Partial License

Full License

Total executed

Execution percentage

Executed Investment

costs in millions

Job opportunities

2004 2 0 0 2 2 100% 3105 179 2005 7 0 5 2 7 64.3% 2382 421 2006 23 0 23 0 23 50% 16147 2530 2007 4 0 4 0 4 50% 1803 387 Total 36 0 32 4 36 55.6% 23437 3517 Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 34: Licensed Industrial Projects distribution under the investment law in Industrial City of Adra by the Activity type during the period: 2004-2007

Years Food Industries

Textiles Industries

Engineering industries

Chemical Industries

Other Industries Total

2004 1 0 1 0 0 22005 0 3 4 0 0 72006 2 0 19 1 1 23 2007 3 0 0 1 0 4Total 6 3 24 2 1 36

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 35: Implemented Industrial Projects under the law No.21 of 1958 for the

years 2004-2007 in Million SYP in the industrial City of Adra

Executed or under execution Projects Years Licensed

Projects Industrial License

Partial License

Full License

Total executed

Execution percentage

Executed Investment

costs in millions

2004 0 0 0 0 0 0 02005 146 140 0 6 146 1400 1743 2006 646 635 4 7 646 602 5009 2007 334 319 5 10 334 16066 5514 Total 1126 1094 9 23 1126 18068 12256

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

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D- Gross investments of the Industrial Cities: Table 36: Actual implemented licensed projects under the Investment law no.10 of 1991 and its amendments and the LD No.8 of 2007 in all of the Industrial Cities for the period 2004-2007

Executed or under execution Projects Years Licensed

Projects Industrial License

Partial License

Full License

Total executed

Execution percentage

Executed Investment

costs in millions

Job opportunities

2004 34 6 15 4 25 73.5% 23267 4011 2005 34 6 10 8 24 70.6% 7875 1708 2006 70 7 33 1 41 58.6% 49629 6698 2007 18 5 5 0 10 55.6% 4428 970 Total 156 24 63 13 100 61.1% 85199 13387 Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 37: Development of the executed industrial projects in the three industrial cities by the type of activity for the period: 2004-2007

Years Food Industries

Textiles Industries

Engineering industries

Chemical Industries

Other Industries Total

2004 5 18 7 4 0 34 2005 0 15 7 7 5 34 2006 13 9 28 18 2 70 2007 5 1 2 5 5 18 Total 23 43 44 34 12 156

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Table 38: Implemented Industrial Projects under the law No.21 of 1958 for the years 2004-2007 in Million SYP in all of the Industrial Cities

Years No’s of projects

No’s of executed investment projects

Executed Investment costs in million SYPs

Job opportunities

2004 17 17 394 411 2005 1078 289 15169 7931 2006 1011 774 21156 8187 2007 980 476 27319 10201 Total 3086 1556 64038 26730

Source: Ministry of Local Administrations & Environment (Industrial Cities 2007)

Third- Transportation Sector: A- Licensed investments of the transportation sector: The number of land, maritime and air transportation projects licensed under the provisions of Law no.10 of 1991 and its amendments and the Investment Promotion Decree No.8 of 2007 mounted to 1983 projects during the period 1991-2007, of which 51 projects were licensed in 2007. The total number of the implemented transportation projects was 1461 that created about 34928 direct job opportunities with realized investment costs that mounted to SYP 52.345 b. Thus the total implementation percentage of the passengers and goods transportation projects was 73.7% in terms of the number of projects and 33.1% in terms of investment costs.

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In addition to the a.m. land transportation projects 44 planes were licensed as ideal unprecedented projects in Syria for air transportation (the Charter) the implementation procedures of some of which began actually.

Table 39: No’s of the licensed and executed transportations projects under the law 10 of 1991, its amendments and the LD No.8 of 2007 by governorates for the period

1991-2007 General 1991 -1995 1996 -2000 2001 -2006 2007 Sub total

Governorate

Lice

nsed

Exe

cute

d

Exe

cutio

n%

Lice

nsed

Exe

cute

d

Exe

cutio

n%

Lice

nsed

Exe

cute

d

Exe

cutio

n%

Lice

nsed

Exe

cute

d

Exe

cutio

n%

Lice

nsed

Exe

cute

d

Exe

cutio

n%

Damascus 116 116 100% 41 41 100% 178 45 25% 11 0 0 346 202 58.4

Rural Damascus 27 27 100% 26 26 100% 228 149 66% 8 0 0 288 202 70.1

Aleppo 43 43 100% 51 51 100% 290 231 80% 10 0 0 394 325 82.5

Hama 27 27 100% 25 24 96% 192 168 88% 1 0 0 245 219 89.4

Homs 16 16 100% 14 14 100% 176 145 82% 3 0 0 209 175 83.7

Lattakia 8 8 100% 21 21 100% 105 61 58% 4 0 0 138 90 65.2

Tartous 6 6 100% 10 9 90% 138 104 75% 7 1 14% 161 120 74.5

Idleb 5 5 100% 6 6 100% 47 40 85% 2 0 0 60 51 85.0

Arraqqa 1 1 100% 2 2 100% 25 9 36% 1 0 0 29 12 41.4

Dier Ezzour 6 6 100% 4 4 100% 29 15 52% 2 0 0 41 25 61.0

Hassakeh 4 4 100% 1 1 100% 27 11 41% 0 0 0 32 16 50.0

Dar’a 2 2 100% 4 4 100% 15 12 80% 1 0 0 22 18 81.8

Swayda’ 1 1 100% 0 0 0 7 1 14% 1 0 0 9 2 22.2

Qunaytera 0 0 100% 1 1 100% 7 3 73% 0 0 0 8 4 50.0

Total 262 262 100% 206 204 99% 1464 994 68% 51 1 2% 1983 1461 73.7

Source: Ministry of Transportations and SIA Data

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Graph 9: Percentage of the executed Transportation Projects to the Licensed ones by governorates

-400 -300 -200 -100 0 100 200 300 400 500

AleppoDam

ascusRura

l Dam

ascu

s

HamaHomsTartousLa

ttakiaIdleb

Dier ezzou

rHas

sake

hArra

qqaDar'aSwaydaQun

aytera

licensedexecuted

B- The implemented investments of the transportation sector:

Table 40: Actual implemented licensed projects under the Investment Law No.10 of 1991 and its amendments and the LD No.8 of 2007 by years,

investment costs and job opportunities for the period 1991-2007

YearsNo’s of licensed projects

No’s of executed projects

Execution percentage%

Licensed investment

costs in million SYP

Executed investment

costs in million SYP

Execution %

Job opportunities

1991-2000 468 466 99.6 27093 27048 99.8 20851

2001 210 210 100 4573 4573 100 2959 2002 374 374 100 7026 7006 99.7 4245 2003 131 131 100 2585 2585 100 1432 2004 182 144 79.1 6810 5009 73.6 2660 2005 283 66 23.3 31900 2942 9.22 1527 2006 282 69 24.5 20882 3110 14.9 1231 2007 51 1 2.0 57059 72 0.13 23 Total 1983 1461 73.7 157928 52345 33.1 34928

Source: Ministry of Transportations and SIA Data

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Fourth- Projects of Real Estate Complexes: The real estate sector is particularly important for the national economy since it has front and back connections with 80-100 other minor economic activities particularly with the sub-sector of manufacturing building materials and transactions...etc. The Prime Minister's Office ratified the draft Investment and Real Estate Development Law that is aimed at creating a suitable legislative environment for the development of the sector of real estates and residences. In line with the current requirements of the development process in all development fields the Supreme Council of Investment took the initiative of including projects of new nature that are important and that meet the government ambitions in developing and promoting real estate investment. Those complexes consist of districts in which the main elements of residence, commerce, business and tourism are available according to international standards including residential towers, hotels, bourse, commercial offices, and malls; therefore it included 4 projects of this nature in 2005. And it is hoped that a new legislation will be issued regulating the real estate investment to complement this step and to further proceed in this type of new projects.

Table 41: real estate complex projects licensed by the investment law No.10 of 1991 and its amendments in 2005

Investment costs in million SYPs

Investing party GovernorateLocal

currency Foreign

currencies

Total Job Opportunities

World Trade Centre project

Rural Damascus

277.3 6232 6509 3600

The eighth gate project

Rural Damascus

26440 3161 29601 700

Rwad Alshahba’ project

Aleppo 1528.3 6651 8179.4 1000

Business and money’s street Project

Rural Damascus

585 16300 16885 2000

Total 28830.6 32344 61174.6 7300 Source: SIA Data

Some of these projects did really start buying the required lands for their projects and to set its plans, and the eighth gate project has already commenced and the execution is about 15%. Fifth- The Agriculture Sector: The agriculture sector is still taking the lead in the structure of the Syrian economy as it employs one third of the labour force and maintains a high level of self-food sufficiency but the unfavourable climate circumstances of the last two years accompanied with slow application of new irrigation methods and the use of old

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production techniques led to both qualitative and quantitative recession in the harvest particularly of wheat and cotton. And we don’t need of course to say that the development of the other sectors largely depends on the extent of development achieved in the agricultural one. Anyway this sector was given exemptions and incentives to which the Investment Promotion Law added new incentives the most important of which was the possibility of digging wells, allowing foreign investors to own the project, and promoting modern irrigation projects. The number of the agricultural projects that were licensed within the period (1991-2007) was 176 of which 28 projects were licensed in 2007. Those projects included 143 projects for livestock breeding, 33 projects for agricultural production, services and irrigation and they are expected to create about 10542 job opportunity within the period 1991-2007 among them 1051 job opportunities are expected in 2007 with total investment costs of about SYP 4156 b. of which SYP 3619.7 m. in 2007. The low number of agriculture projects in comparison to other projects is due to the fact that – as we said earlier- they are given government support and full facilities to push this sector forward and to promote it as the agricultural and animal production is not subject to any tax. The implementation percentage of investment agricultural projects was 40.3% during the period 1991-2007 in terms of the projects number, but if we exclude the number of projects licensed in 2007 as new projects that are still being established and did not enter the legal implementation phase the implementation percentage would be 49% creating about 3690 real and direct job opportunities.

Table 42: Actual implemented licensed agricultural projects under the Investment Law No.10 of 1991 and its amendments and the LD No.8 of 2007 by

years, investment costs and job opportunities for the period 1991-2007

No’s of agricultural projects Investment costs in million SYPs Job opportunities Years

Licensed Executed % Licensed Executed % Licensed Executed

1991-2000 11 8 72.7 1057 833 78.8 529 380

2001 6 2 33.3 1008 140.3 13.9 374 103

2002 4 4 100 263.6 263.6 100 143 143

2003 15 8 53.3 2638.8 684.6 26 602 283

2004 18 8 44.4 6137.1 803 13.1 1311 360

2005 28 11 39.3 13381.1 1985.3 14.8 2645 733

2006 66 28 42.4 13350.8 6337 47.5 3887 1601

2007 28 2 7.1 3619.7 467.5 12.9 1051 87

Total 176 71 40.3 41456 11514 27.8 10542 3690

2007% 15.9 2.8 8.7 4.1 10 2.4 Source: SIA data

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Six- The Health Sector: A- Specialized Hospitals: This type of service projects is new for the Investment Law No.10. The Supreme Council of Investment started in 2001 to include specialized hospitals with advanced and qualitative specializations or that have high levels of current medical specializations within specific standards defined by the Ministry of Health. Thus the number of the licensed hospitals reached 25 during the period 2001-2007 with a total investment cost of about S.P. 35646 m. The number of the job opportunities they create is estimated at around 7741. It is worth mentioning that all those hospitals have new specializations or high levels of existing medical specializations such as cardiac surgeries, treating cancer tumours, test-tube babies, and treating people with special needs...etc.

Table 43: Actual licensed private Specialised Hospitals projects under the Investment Law No.10 of 1991 and its amendments and the LD No.8 of 2007 by

years, investment costs and job opportunities for the period 2002-2007

Years No’s of hospital Investment costs in million SYPs Job opportunities

2001 1 980 323 2002 2 626 148 2003 1 265 115 2004 3 3632 708 2005 5 3321 914 2006 11 18402 2659 2007 2 840 2874 Total 25 35646 7741

Source: SIA data

B- Manufacturing projects of pharmaceutical and medical equipments: The pharmaceutical and medical equipment manufacturing projects are considered industrial projects and I have allocated this paragraph to represent the data of this industry separately in order to look at it from a medical perspective.

Table 44: Number of licensed investment projects under the Investment LD No.8 of 2007 by economic activity, investment costs and job opportunities for

the period 1991-2007

Activity No’s of projects Investment costs in million SYP Job Opportunities

Pharmaceutical industry

29 12169 2519

Medical industry 18 6092 1658 Total 47 18261 4177

Source: SIA data

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Seventh: The Oil, Mineral Resources and Energy Sector: In the light of the continuous retreat of oil production, the Syrian government is trying its best efforts to develop oil refinement projects by means of investment in exploration and drilling in order to boost the production activities and at the same time it exerts efforts aimed at increasing the refinement capacities since both refineries of Banias and Homs do not meet the local demand, therefore, Syria seeks to renovate the oil refineries and it has set plans for this purpose and the same time an MOU was signed to establish a new joint refinery in the east of Homs among Syria, Iran, Venezuela and Malaysia with a capacity of 140000 barrel a day. Another MOU was signed with the Kuwaiti Nour Co. for fiscal investments to build a refinery with a value of SYP 88074 m. in Deir Ezzor with a capacity of 140000 barrel a day under the umbrella of the Investment Promotion Law and it is now in the phase of making the required implementation studies. A contract was also signed for a joint venture between the General Co. for Marble and Asphalt and Knawf Co. of Germany to habilitate the gypsum factory in Lattakia. The government promotes as well the private sector investments in the field of oil and energy and provides the required facilities to encourage this crucial sector. Sites have been delivered for ten projects for Portland cement production whose total production capacity mounts up to 24300 thousand tons a year. Some of those projects began to examine and contract on machines in order to prepare their infrastructures in the region of Abu Al Shamat, Homs and Al Raqqa and the operation experiments of some of them is expected to start in 2009. Hama cement factory moved to the production phase this year with a production capacity of 1m/ton a year. The companies licensed under the Investment Promotion Law that have petroleum and wells measurement and digging activities began the implementation of their studies and maps that indicates their seriousness and that makes them considered among the projects that have actually begun.

Table 45: Oil, menials and energy licensed under the law No.10 of 1991 and the LD No.8 of 2007 by the investment costs and the value of the

imported machinery and job opportunities

Activity No’s of Projects

Investment Costs in Million SYP

Investment Costs in Foreign

Currencies

Machinery Value in m SYP

Job Opportunities

Portland Cement Production 21 196207.4 151930.6 120230 9152 Oil Service Joint Syrian- Egyptian Company 1 50 43 37 70

focal measurement Services Joint Syrian-UAE Company 1 482 450 426 32

Ground Liquids engineering Joint Syrian Egyptian Company 1 98 82 26 44

Dier ezzour Oil Refinery Noor Kuwaiti Company 1 88074 66020 64240 1200

Lattakia’s Gypsum enhancement Joint Syrian-German Company 1 330 301 263 54

Winds Electricity Generator Farms 1 23767.3 22324.1 18444 120

Electricity generation Station 1 15178 15042.3 15000 200 Winds Electricity Generating 1 88049.6 88010 74434 470

Total 29 412237 344205 293100 11342 Source: Ministry of Oil and Mineral Resources & SIA Data

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Eighth- Distribution of Investment Projects by Governorates: The distribution of the investment projects on the geographical area of the governorates can be considered in terms of the numbers of those projects and in terms of their estimated investment costs. In terms of the distribution of those projects by their numbers we find that the three governments that include industrial cities (Aleppo, Damascus countryside, and Homs) have attracted about 55% of the total projects that were licensed during the period (1991-2007) of which Aleppo governorate got (849) projects of the total licensed ones that means it got about 22.6% of the other governorates' share. In the second place we have Damascus countryside that got 847 projects, and then we have the governorate of Homs in the third place that got 371 projects, Damascus governorate got 358 projects, Hama got 345 projects, Lattakia got 216 projects, Tartous got 215 projects, Idleb got 124 projects, Al Raqqa got 113 projects, Daraa got 104 projects, Deir Ezzor got 87 projects, Al Hassaka got 68 projects, Swayda got 54 projects, and Al Quneitra got 11 projects. We find contradiction in the arrangement of the licensed projects in terms of the investment costs as Damascus countryside governorate moved to the first place and got 31.3% of the total investment costs of the projects that were licensed during the period (1991-2007), then we have Homs governorate in the second place that got 20.3%, Aleppo 12.2%, and Deir Ezzor governorate moved forward to the fourth place as it got 9.4%, then we have Lattakia that got 5.4%, Tartous 4.8%, and the governorates that got the least shares were Daraa, Swayda, and Quneitra whose share was 2.2% of the total estimated investment costs.

Table46: Licensed investment projects distribution under the Investment LD

No.8 of 2007 in the Governorates respectively by economic activity, investment costs and job opportunities for the period 1991-2007

Top to less projects number by governorates Top to less investment costs by governorates Governorate Number of

projects Distribution % Governorate Costs in

million SYP Distribution %

Aleppo 849 22.6 Rural Damascus 390020 31.3

Rural Damascus 847 22.5 Homs 253350 20.3

Homs 371 9.9 Aleppo 159508 12.8 Damascus 358 9.5 Dierezzour 117194 9.4 Hama 345 9.2 Lattakia 67546 5.4 Lattakia 216 5.7 Tartous 60346 4.8 Tartous 215 5.7 Hama 49931 4 Idleb 124 3.3 Damascus 38456 3.1 Arraqqa 113 3.0 Arraqqa 36505 2.9 Dar’a 104 2.8 Hassakeh 22484 1.8 Dier ezzour 87 2.3 Idleb 22418 1.8 Hassakeh 68 1.8 Dar’a 18293 1.5 Swayda’ 54 1.4 Swayda’ 7348 0.6 Qunaytera 11 0.3 Qunaytera 1676 0.1 Total 3762 100 Total 1245072 100 Source: SIA Data

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Ninth: The Distribution of the Licensed Investment Projects by legal status:

Table47: Licensed investment projects under the Investment LD No.8 of 2007 respectively by legal form for the period 1991-2007

Legal Form Number of

projects Distribution

%Costs in billion

SYP Distribution

%

Individual Establishments 1992 53 340.1 27.6

Joint-Stock Companies (PLC) 148 3.9 504.2 40.9

Limited Liability Joint Ventures 11 0.3 7.4 0.6

Joint Ventures Companies 5 0.1 23.6 1.9

Limited Liability Companies 214 5.7 154 12.5

Partnerships 483 12.8 73.7 6.0

Unlimited Liability Partnerships 909 24.2 131 10.6

Total 3762 100% 1234 100% Source: SIA Data

Graph 10: Projects' Investment Costs by Legal Form

Individual Establishments

Partnerships LL CompaniesJoint LLC

Unlimited LP

Joint-Stock

Joint ventures

The Individual Establishments dominated in the licensed projects from a legal point of view and their percentage mounted to 53% of the total number of enterprises, followed by Unlimited Liability Partnerships with a percentage of 24.2%, and then other legal forms came with lesser numbers of Partnerships which formed about 12.8%, then we have companies of limited liability 5.7%, then come the JOINT-STOCK Companies at 3.9% respectively, and there are 11 Joint LLCompanies as well, and 5 LL Joint Ventures that shows objective and subjective reasons that hinders the establishment of Joint Ventures primarily, due to an incomplete bourse that is the main pillar for associations of capitals, in addition to the firm and long procedures the company goes through, during its establishment, and on the top of which we have the subjective factor on the part of the investors who prefer to establish persons or family companies to manage their funds directly that makes them have more peace of mind. Some investors would also transform their

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companies into Individual Establishments in order to dodge from paying the stamp fee. But if we consider the distribution percentages of the investment costs by legal status we find that anonymous companies have 40.9%, persons companies have 27.6% and the LTD companies have 12.5%. Moreover, there are 10 holding companies with a gross capital of SYP 292445 m. that is equal to US$ 5848.9 m. the last of which is the Syrian-Qatari Co. whose capital is US$ 250 m.

Table 48: Holding Companies Licensed by law No.10 of 1991 and LD No.8 of 2007 and its Working Capitals for the period of 1991-2007

Holding company's Name Capital SYP millions

Equivalent US$

1. Syrian-Qatari Investment Company 250000 5000

2. Alzaeem Holding company 1000 20

3. Offoq for investments holding company 1250 25

4. Insha'a holding company 1000 20

5. Sham holding company 18025 360.5

6. Syria Holding Company 4000 80

7. The Kuwaiti Holding Company 10000 200

8. The Investment Fund of Alsharq Holding company 4000 80

9. Castle Invest Holding company 1000 20

10.Maoad AlI’mar Holding Company 2170 43.4

Total 392445 5848.9 Source: SIA Data

Graph 11: Investment costs distribution by the legal form.

Individual establishments

Partnerships LLCLL Joint Ventures

Unlimited Liability partnerships

PLCs

Joint Ventures

Tenth- Job Opportunities estimated for investment projects:

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Creating job opportunities is still one of the most elements the countries look for by attracting investment projects when they include them under investment laws, and that's the subject of continuous care by the government. It is proved by experience that the numbers declared in the feasibility studies of those projects or the inclusion decisions are lower than the actually employed ones for reasons that have become well known such as to avoid registering them at the Social Insurance Institution, and that's what was avoided by Legislative Decree No.8 of 2007 for investment promotion when it gave certain grades of additional tax exemption for the enterprises whose employees are registered at the Social Insurance Institution. It is well known that the investment projects of whatever activities create about 3-5 indirect job opportunities for each direct job opportunity it creates. The direct job opportunities created by projects licensed under the investment law are estimated to be 218398 in the period 1991-2007 of which 14315 are thought to be from the projects licensed in 2007 and the number of the actually realized ones from the total number of the implemented projects is about 128488 direct job opportunities during the period 1991-2007, among them 69173 in the industrial sector, 43928 in transportation projects and 15387 in the agricultural sector and projects of other sectors. It is worth mentioning here that the projects that were licensed in the last two years are still in the establishment phase.

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000 Graph 21: Estimated Job Opportunities from the projects under the Law No.10 of 1991 by the years

Syria has a relative feature in terms of the average wage costs per hour. The following chart shows the wage costs in Syria in comparison with a number of other chosen countries8.

0

5

10

15

20

25

Syria Egypt Turkey Brazil Italy Korea USA

Graph 13:m: costs of wages/hr from selected statesin in2003 in US cents

8 Source: Competitiveness Mind-set Project of the UNDP report to cotton clothes, p.36

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Eleventh- Machines and equipments imported for investment projects: The value of machines and equipments imported for the projects licensed during the period 1991-2007 is estimated at SYP 662.4 b. of which SYP 107.8 b. in 2007, from which SYP 128 b. are actually realized in the field of industry, SYP 44 b. in the field of transportation, SYP 24 b. in the field of agriculture, and SYP 11.5 b. in other sectors, that makes in total SYP 207.5 b. with an implementation percentage of 31.3% and that indicates the large volume of modern imported techniques, machines and equipments that are made available for the Syrian industry particularly to keep up with international technologies, and it is a positive point provided by the investment law, in addition to the value of transportation means imported for transportation projects that are all new and not renovated. Twelfth: The Investment Costs of the Investment Projects: The investment costs of the investment projects licensed under the Investment Law no.10 of 1991 and its amendments during the period 1991-2007 are about SYP 1494.8 b. of which SYP 929.9 b. are in foreign currency, whereas the investment costs for 2007 alone mounted to SYP 401.1 b. that is about 26.7% of the total investment costs of the total number of the projects that were licensed since the investment law has been issued.

Graph 14: investment costs distribution in the licensed projects by years in million SYP

0

100000

200000

300000

400000

500000

1991

1993

1995

1997

1999

2001

2003

2005

2007

Thirteenth: Expansion in Existing Projects: Once they succeed, the implemented projects tend to expand their production capacities by means of adding new production lines that lead to increase their investment costs, the values of machines and the number of employees. The number of the existing industrial projects that doubled their production capacities and their investment costs in 2007 is more than 64 projects with amended investment costs that reached about SYP 17.9 b. such as (Al Sweidi co. for Cables, the French Bel Majory co. for Cheese, and a large number of food, textile and metallurgical companies...etc), in addition to 14 transportation projects with amended investment costs that mount to SYP 400 m.

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Chapter Four: Investment in Activities and Other Sectors

1- Tourism Sector: Tourism investments developed in two main fields one of them the investments in tourist establishments (hotels, restaurants) that are in service and the other one is the tourist investments of projects (hotels, restaurants) that are under construction and their total investments in 2007 mounted to SYP 355.4 b. of which SYP 11 b. were in 2004, SYP 32 b. in 2005, and a quantum leap in 2006 as those investments reached to SYP 109 b. and SYP 68.1 b. in 2007 as a result of the tourist investment markets that include preparing lands free of buildings but feasible ones in addition to adopting new contracting formulas and a new approach to promote investments, improve the legislative environment, provide funding and infrastructure and ease procedures.

Table 49: Tourism investments indicators for the years 2003-2007

Descriptions Till 2003 2004 2005 2006 2007 Total

1. Tourism investments in billion SYP 136 11 32 109 68.1 355.4

2. Investment in-service in billion SYP 136 7 23 20 7 193

3. Projects under constructions 0 4 8 89 61.4 162.4

Licensed projects hold construction license 0 4 8 34 35.4 81.4

Projects resulted from tourism investment markets 0 0 0 26 13.3 39.3

Projects resulted from Tourism agreements 0 0 0 29 12.7 41.7

Source: Ministry of Tourism

First: Tourist Investments in the framework of the 10th five-year-plan: The tourist investments implemented in the first year of the 10th five year plan till 2007 were SYP 177.1 b. of which SYP 27 b. for in-service projects that form 28% of the total investments of the 10th five year plan that mount to SYP 90 b. and SYP 150.7 b. for projects under construction as it is shown in the following table:

Table 50: Tourism investments indicators during the period of: 2006-2007

Descriptions 2006 2007 Total

4. Tourism investments in billion SYP 109 68.1 177.1

5. Investment in- service in billion SYP 20 7 27

6. Projects under constructions 89 61.4 150.4

Licensed projects hold construction license 34 35.4 69.4

Projects resulted from tourism investment markets 26 13.3 39.3

Projects resulted from Tourism agreements 29 12.7 41.7 Source: Ministry of Tourism

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A- In-service Projects: The in-service investments in 2005 mounted to SYP 166 b. and in 2006 about 567 establishments became in-service ones with about SYP 20 b. and the in-service investments that were implemented in 2007 mounted to SYP 6781 m. with an accommodation capacity of 144 establishments, 1554 beds, 18828 chairs as it is shown in the following table:

Table 51: in-service investments developments during the period of 2005-2007

in million SYP Capacity Description No’s of

constructions

No’s of beds No’s of seats

Tourism investments in

billion SYP

Hotels 566 43262 64893 118970 Restaurants 1780 0 157436 47231

Total 2005

2346 43262 222329 166201 Hotels 56 2261 3135 8488

Restaurants 511 46089 11603 Total

2006 567 2261 49223 20091

Hotels 29 1554 3403 3475 Restaurants 115 0 15425 3306

Total 2007

144 1554 18828 6781 Source: Ministry of Tourism

B- Projects under construction: The tourist investments under construction with establishment licenses in 2004 were about SYP 4237 m. before the base year that is going to be licensed in service since 2007, the investments of 2005 the base year that is going to be licensed since 2008 were about SYP 7930 m. the investments of 2006 that is going to be licensed in service by 2009 were about SYP 89305 m. the investments of 2007 that is going to be licensed in service by 2010 were about SYP 61502 m. distributed as follows:

Table 52: Development of the under construction projects for the period 2004-2007 in million SYP

Restaurants Hotels Total Years

No’s of rest’s

Investment value in million SYP

No’s of hotels

Investment value in million SYP

No’s of investments

Investment value in million SYP

2004 20 820 19 3417 39 4237

2005 28 2491 19 5439 47 7930

2006 71 5943 80 83362 151 893.5

2007 47 5034 59 56468 106 61502

Source: Ministry of Tourism

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Graph 15: Tourism projects under construction for the period 2001�2007

0

20

40

60

80

100

2002

2003

2004

2005

2006

2007

C- The geographical distribution of in-service and under-construction tourism investments: The tourism investments that are in service are mainly located in 6 governorates with a percentage of 88.3% and 95.9% for the projects under construction. There is a positive inclination in tourism investments from in-service projects to under construction ones in Damascus countryside with an increase of 9%, Tartous with an increase of 12%, Lattakia with an increase of 2%, and a decrease in Damascus of about 14.7% that indicates that the investments are mainly located in Damascus city and distributed to other governorates as it is shown in the following table:

Table 53: Investments Damascus Rural

Damascus Lattakia Tartous Aleppo Homs Other

Gov’sIn-Service

Investments29.2% 20% 14% 8% 10% 7% 11.8

%Under

construction13% 27% 15% 24% 11% 6% 4%

Source: Ministry of Tourism

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Second- Job opportunities: The tourism investments realized about 145323 job opportunities from in-service projects and 35429 job opportunities from under construction ones.

Table 54: Job

opportunities Till 2003 Executed 2004

Executed 2005

Executed 2006

Executed 2007 Total

Direct opportunities 106166 5220 15036 12625 6276 145323

Annual opportunities 0 2453 4285 6615 22077 35429

Source: Ministry of Tourism

Third- Main indicators of the tourist sector:

• Flow of Arab and foreign investments implemented in the tourist sector (FDI): the Arab and foreign licensed and contracted investments in 2006 were about SYP 69737 m. that were for investors from: Kuwait, UAE, Qatar, Saudi Arabia, Jordan, Russia, Britain, and Turkey. They are expected to be implemented during the period 2007-2010 with an investment flow of SYP 19266m. during the a.m. years.

• The country's earnings of foreign currency: the country's earnings of foreign currency in 2007 till the third quarter of it were about SYP 114 b. of which SYP 65 b. were from Arabs, SYP 15 b. were from foreign investors, and SYP 34 b. were from Syrian expatriates.

• The tourist sector contribution to GDP: the GDP from the revenues of the tourist sector till September 2007 were bout SYP 114312 m. with an accomplishment percentage of 83% of the domestic product planned for that is SYP 137266 b. in 2007, of which SYP 63622 m. are for hotels and restaurants (both public and private ones).

• The value of the production requirements in the tourist sector till 2007 was about SYP 62872 m. of the requirements planned for that amount to SYP 75496 m. of which SYP 39838 m. are for private and public hotels and restaurants.

• The value of the domestic product from the tourist sector till 2007 was SYP 51440 m. with an accomplishment percentage of 83% of the product planned for that is SYP 61770 m. of which SYP 23784 m. were for public and private hotels and restaurants.

Table 55: Development of the accumulated investments by the type of ownership title during the period of: 2000-2007

Hotels activity Restaurant activity

Years Value Public sector

Value Private sector

Value Public sector

Value Private sector

Totals in the

public sector

Totals in the

private sector

Total of hotel investments

Total of restaurant

investments

Sub total

2000 11029 67652 2166 30343 13195 97995 78681 32509 1111902001 11029 68407 2166 31683 13195 100090 79436 33849 113285

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2002 11029 70053 2166 33134 13195 103187 81082 35300 1163822003 11029 78506 2166 43638 13195 122144 89535 45804 1353392004 11029 80937 2166 49240 13195 130177 91966 51406 1433722005 11029 88474 2166 64533 13195 153007 99503 66699 1662022006 11029 93674 2166 79300 13195 172974 104703 81466 1861692007 11029 97149 2166 82606 13195 179755 108178 84772 192950Source: Ministry of Tourism

Graph16: The development of the accumulative tourism investments by years in million SYP

0

50000

100000

150000

200000

250000

2000

2001

2002

2003

2004

2005

2006

2007

Table56: In-service constructions by regions and governorates in2007 Capacity Regions Governorates

No's of beds No's of seats Tourism investments

in million SYP Investment %

Damascus 15038 73290 56265 29.2 Rural Damascus 8724 63929 38705 20.1

Dar’a 505 4120 2387 1.2 Swayda’ 20 2275 706 0.4

Qunaytera 25 490 205 0.1

Southern Region

Total 24312 144104 98268 50.9 Lattakia 6911 38166 26833 13.9 Tartous 2936 23739 15190 7.9 Costal region

Total 9847 66905 42023 21.8 Homs 3856 14768 12900 6.7 Hama 1027 10916 6508 2.9 Middle Region Total 4883 25684 18508 9.6

Aleppo 4815 27739 19166 9.9 Idleb 392 6428 2769 1.4 Northern Region Total 5207 34167 21935 11.4

Dier ezzour 1733 6170 5837 3 Hassakeh 781 8429 4163 2.2 Arraqqa 314 4921 2188 1.1

Eastern Region

Total 2727 19520 12218 6.3 Over all 47077 290380 192952 100%

Source: Ministry of Tourism

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Table 57: Projects under construction by regions and governorates during the year 2007

Capacity Regions Governorates No's of beds No's of seats

Tourism investments in

million SYP Investment %

Damascus 3744 6322 21162 13 Rural Damascus 10759 34647 43784 26.9

Dar’a 417 2404 829 0.5 Swayda’ 218 5057 798 0.5

Qunaytera 0 0 0 0

Southern Region

Total 15138 48430 66573 41 Lattakia 7193 24404 24292 15 Tartous 8744 21906 38506 23.7 Costal region

Total 15937 46310 62797 38.6 Homs 3756 15021 9599 5.9 Hama 152 6200 1186 0.7 Middle Region Total 3908 21221 10786 6.6

Aleppo 3669 22768 17479 10.8 Idleb 16 2753 617 0.4 Northern Region Total 3685 25521 18096 11.1

Dier ezzour 320 510 636 0.4 Hassakeh 510 7545 1972 1.2 Arraqqa 607 6731 1643 1

Eastern Region

Total 1347 14786 4251 2.6 Over all 40015 156268 162503 100%

Source: Ministry of Tourism

2- Private Banking Sector: The monitory authority kept directing its policies to the realization of monitory stability and exchange rate stability for the Syrian pound. The funding system of the importation process was expanded through the banking system and the Syrian pound became no more linked with dollar as it became linked with the unit of the private withdrawal rights that give the exchange rate more stability. The operating banks in Syria are 15 banks today including 6 public banks and 9 private ones that include two Islamic banks that have started their operations in the Syrian market and established branches in the governorates. Some exchange companies were licensed as well and some of them have actually started working. Thus the banking sector witnessed positive growth in the last two years in line with the general economic activity. The total assets, clients' deposits, the private sector credits and the capital accounts increased as well, in addition to the foreign currency deposits that increased more than the local currency ones. At the same time the increasing number of banks and the expansion of the existing ones led to a tangible rise in capital accounts that was more than three times what it was before according to the statistics of the Central Bank of Syria. The adoption of stimulating arrangements for this sector and the positive performance of the working banks contributed to attract new investors to the market. A list of the licensed traditional and Islamic banks in Syria is shown in the following table.

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Table 58: The Private Licensed Traditional and Islamic Banks for the year 2006-2007 for the government delegation

Private Traditional Banks

Bank' Name License Decision No's of branches

France Bank –Syria 32 of 2007 1

Bank of Jordan 36 of 2007 Not yet opened

Syria & the Gulf bank 32 of 2007 1

Private Islamic Banks

Bank' Name License Decision No's of branches

Syria International Islamic Bank 67 of 2006 4

Alsham Bank 66 of 2006 1

Albarakeh Bank –Syria 48 of 2007 Not yet opened

Table59: Volume of the investments and the FDI percentage and number of labours in the private licensed banks at the government delegation.

Private Traditional Banks

Bank’ Name Capital in m SYP Forex % Staff

Bemo Saudi-Frensi Bank- Syria 1750 49% 367

Bank of Syria and Overseas 3000 49% 242

International Bank of Trade and Finance 1500 49% 242

Audi Bank – Syria 2500 49% 173 Arab Bank – Syria 1500 49% 367

Byblos Bank –Syria 2000 49% 172 Syria Gulf Bank SA 1500 49% 47

Total 12250 49% 849

Private Islamic Bank

Bank’ Name Capital in m SYP Forex % Staff

Syria International Islamic Bank 5000 49% 68

Alsham Bank 5000 49% 135

Total 10000 49% 203 Source: CBS data

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Syria Commission on Financial Markets and Securities is the governing authority for the banknotes sector in Syria and hold all the authorities required to perform its tasks and missions in order to achieve its main objectives of controlling and developing the financial markets and activities attached to it, to secure the just and effectiveness and transparency, and participate in stopping the risks linked to the banknotes dealings, in addition to protecting the civilians, and the forex investors from the unfair or illegal practices, and encourage the saving and investing activities, to serve the national economy. Syria Commission on Financial Markets and Securities supervises and monitors the following authorities: 1- Companies issuing banknotes (Bills, Orders,….) 2- Service and licensed middleman companies 3- Banks and investment companies and licensed investment funds. 4- Financial Markets 5- Accredited auditors and accounting companies Also, the commission is in charge for issuing the instructions and directives, and do all required functions to achieve its objectives, and has all means to control and monitor the bills declaration and information concerning the financial bills. The (Closed) Joint-Stock Companies are mounted to 310 companies, whilst the JOINT-STOCK Companies (which released some of its shares to the public) are mounted to fifty companies, and the total value of its capitals are: SYP48.634.4000, with a reference that this number rise enormously in the near future, after the issuance of the new Company Law, whereas all investment funds, there are no licensed one in the Syrian market, although the commission has prepared the draft of investment funds system which shall be implemented upon the launch of Damascus Foreign Exchange Market. Following the formal establishment of Damascus Bourse in 2006 efforts are focused now on establishing systems of management, programming and staff training. The bourse is going to provide funding for the new and developing establishments, improve companies accounting and financial and declaration approaches with a view to enhance its ability to attract capital sources that will be of added value to the Syrian economy. 3- The Insurance sector: An Insurance Control Authority has been established in order to develop a regulatory framework for the local insurance market with all its activities, define administrative standards and the requirements of quality assurance of insurance services, and to protect clients and investors in this sector. 13 insurance companies are working now in the Syrian market in addition to the Syrian General Organization of Insurance as a government organization, of which four companies adopt an Islamic insurance approach.

68

Table60: Private Insurance Companies and external contributions till end of 2007

Company’s Name Capital in m SYP External contributions in m SYP External contributions %

United Insurance Company 850 255 30% Syrian-Arab Insurance

Company 1000 600 60%

The National Insurance Company 850 272 32%

Arope Syria International Insurance Company 1000 340 34%

Arabia –Syria Insurance Company 1050 535 50.59%

Syrian Kuwaiti Insurance Company 850 424 49.9

Arab Orient insurance Company 850 340 40%

Trust Insurance Company 850 833 98% Alakila for Cooperative

Insurance 2000 740 37%

The Cooperative Union for Insurance 1000 400 40%

Noor for Cooperative Insurance 1500 501 33.4%

Adeer for Insurance 1250 700 56% The Syrian Islamic Company

for Insurance 1000 540 54%

Total 14050 6480 46.12% Source: Syrian Supervisory Commission

4- The Off-Shores Sector (Free Zones): Data coming from the General Organization of Free Zones indicate that the total investments in the Syrian Free Zones were about SYP 514m. in 2002, that developed to reach SYP 706 m. in 2007. During this period the number of people working the free zones increased from 4829 in 2000 to 9455 in 2007, the number of foreign investment companies in the free zones reached to 63 ones, and the number of establishments increased from 610 in 2000 to 1009 in 2007.

Table 61: actual indicators in the general establishment of the free zones(Off-shore Governmental Administration) for the years 2000-2007

Years 2000 2001 2002 2003 2004 2005 2006 2007

Incomes in m SYP 426 498 607 560 705 786 925 1077

Commercial Trade (transactions) in Billion

SYP 44 70 88 104 125 158 206 230

Working Capital invested in the free

zones in Million US$ 514 524 535 546 557 627 653 706

69

No’s of invested plants 610 630 654 678 712 786 932 1009

Staff employed in the plants 4829 4927 5535 6219 6345 7081 8266 9455

Foreign investing companies 0 0 32 41 52 58 62 63

Source: General Establishment for the free zones (off shore)

Table 62: FDI’s in the Free Zones till mid of year 2007

No' of projects by activity Branch

Trading Industrial Banking Services Total

Capital in Thousand

US$ Lattakia 0 1 0 0 1 1193 Seaports 0 1 0 0 1 2500 Airports 1 0 0 0 1 100 Tartous 12 1 0 0 12 44807.3

Adra 6 8 0 0 14 60092 Aleppo 3 0 0 0 3 3154

Damascus 14 8 7 1 30 85000 Total 36 19 7 1 63 196846.3

Source: General Establishment for the free zones (off shore)

Graph 17: Development of the capital invested and the plants in the free zones by years

0

200

400

600

800

1000

1200

2000

2001

2002

2003

2004

2005

2006

2007

70

Chapter five: Foreign Direct Investment (FDI)9:The FDI is one of the most important economic pillars in the current age as it has a serious role to play in the economic and social development process in the countries since it is a main channel through which the capitals and technical and scientific expertise flow. Therefore, the countries and the international community organize dealing with the (non-national) investment and make guarantees to it on the basis that it is linked with the capitals circulation and internal and external use10.It is considered as well a basic source to support the national capabilities whose role enhancement is focused on by the 10th five year plan in the light of the limited available local resources, and it is an important instrument to accelerate the manufacturing processes and to develop the sectors of tourism, services, infrastructure, transfer advanced technology and administrative skills, and to explore foreign markets for the Syrian products. And in order to make Syria a harbour for foreign investment the plan takes into consideration the necessity of designing and providing programmes capable to compete with similar countries in the region.

A- Net FDI inflow: Table 63: Net FDI inflows to Syria for the period 2000-2007 in million US$

Years 2000 2001 2002 2003 2004 2005 2006 2007* FDI Net Inflow 270 110 115 160 275 500 600 750 Source: CBS Data *Estimated for 2007

Graph 18: Net FDI in million US$

2000 2001 2002 2003 2004 2005 2006 20070

100

200

300

400

500

600

700

800

9 The Balance of Payments Guide issued by the IMF, 5th edition of 1993 defines the foreign direct investment as the investment that reflects a long relationship and continuous care of a residential entity in another economy other than that of the investor. The aim of the direct investor is to practice some kind of influence on the management of the establishment that is in the other economy. A percentage of 10% or more of the rights ownership (ex. normal shares or the voting strength at the establishment) is adopted so that the investment can be called an FDI. 10 Foreign Investment: Barriers and Legal Guarantees, publications of the Center of Arab Unity Studies, Dr. Dureid Mahmoud AL Samerraei.

71

Table 64: FDI inflows under the Law No.10 of 1991 and its amendments for the period: 1991-2006

Source: CBS Data

B- Foreign Direct Investment Licensed Projects: According to the statistics the foreign investment is on the rise as the number of foreign investment projects that include Arab or foreign partners and that are licensed under the Investment Promotion Law reached to 226 projects during the period 1991-2007, with total investment costs of SYP 442.8 b. that is 29.6% of the total investment costs of the licensed projects. The number of countries having investments in Syria reached to 35 countries. The Turkish investors got the first place on the list of the incoming investments as they have 30 projects, the Iraqi investors were the first among the Arab states with 28 projec000ts, followed by the Lebanese investors with 26 projects, then the Saudi ones with 22 projects, the Kuwaiti investors with 21 projects and the Jordanian investors with 16 projects. This is attributed to the facilitation and improvement of systems and procedures related to dealing with investments, enhancing efforts made for investment promotion and creating an internal and external network of Syrian government and businessmen whose aim is to attract investors and bring back Syrian expatriates' funds. The annual report on the investment climate in the Arab states of 2005 included that 8 Arab countries witnessed an increasing share of FDI flow among which Syrian got the 6th place as it has attracted $ 2.7b. And a share of 9.9% of the total foreign investments coming to the Arab states.

Currency 1991-2000 In million SYP 2001-2006 In million

SYP Gross of 1991-

2006 US$ 370198972 12957.0 861728146 43086.4 56043.4

Euros 178952 8.9 130932480 7855.9 7864.9 Other Currencies

equivalence in Euros 2212135 110.6 4794 0.3 110.9

Total 13076.5 50942.6 64019.2

72

Table 65: Licensed Projects under the Law No.10 of 1991 and LD No.8 of 2007 by years, investment costs, labours and the economic activity for the

years1991-2007

Licensed projects by economic activity

Years In

dust

rial

Agric

ultu

ral

Tran

spor

tatio

ns

Oth

ers

Total

Inve

stm

entc

osts

inm

illion

SYP

Job

Opp

ortu

nitie

s

1991-1995 7 2 1 0 10 3063 947 1996-2000 20 1 2 1 24 5856 1749

2001 7 4 2 0 13 3684.4 1457 2002 10 0 2 0 12 18437.5 2913 2003 3 1 0 2 6 8322.2 1764 2004 19 1 5 1 26 40107.7 4175 2005 20 2 18 5 45 104984.7 13160 2006 35 6 21 3 65 120646.4 6927 2007 18 1 5 1 25 135580 4184 Total 139 18 56 13 226 442795 37276

Sub total (project) 1576 176 1983 27 3774 1494800 218398

FDI % 8.8 10.2 2.8 48.1 6% 29.6 17.1 Source: SIA Data

Graph19: development of the licensed FDI under the Law No.10 of 1991 by years

0

10

20

30

40

50

60

70

1991�199

5

1996�200

02001200220032004200520062007

73

Table 66: Licensed FDI’s under the law No.10 of 1991 and LD No.8 of 2007 from Arabian States by activity, investment costs for the period

1991-2007 in comparison with 2007 1991-2007 In 2007

Type of Activity Type of Activity

State In

dust

rial

Agric

ultu

ral

Tran

spor

tati

ons

Oth

ers

Total Costs in m SYP

Indu

stria

l

Agric

ultu

ral

Tran

spor

tati

ons

Oth

ers

Total Costs in m SYP

Iraq 12 2 14 0 28 13945.9 8 1 4 0 13 2324.6

Lebanon 18 3 5 0 26 9698.8 1 0 0 0 1 128.3

Saudi Arabia 15 1 5 1 22 68959.8 0 1 0 0 1 788.8

Kuwait 15 4 1 1 21 55073.6 1 0 0 0 1 5199.3

Jordan 10 0 6 0 16 3362.8 1 0 0 0 1 809.9

Egypt 2 0 1 3 6 1121.3 0 0 0 0 0 0

UAE 4 0 0 2 6 38587.8 1 0 0 1 2 226.3

Palestine 2 0 4 0 6 1129.9 1 0 0 0 1 500

Algeria 2 0 0 0 2 315.9 0 0 0 0 0 0

Bahrain 1 0 0 0 1 120.4 0 0 0 0 0 0

Libya 0 1 0 0 1 56.7 0 0 0 0 0 0

Qatar 0 0 0 1 1 125330 0 0 0 1 1 125000

Morocco 0 1 0 0 1 241.3 0 0 0 0 0 0

Total 81 12 36 8 137 317944 13 2 4 2 21 134977 Source: SIA Data

Table 67: Licensed FDI’s under the law No.10 of 1991 and LD No.8 of 2007 from Foreign States by activity, investment costs for the period

1991-2007 in comparison with 2007

Years 1991-2007 2007

Activity Activity

State

Indu

stria

l

Tran

spor

tatio

ns

Agr

icul

ture

Oth

ers

Total Costs

Indu

stria

l

Tran

spor

tatio

ns

Agr

icul

ture

Oth

ers Total Costs

Turkey 16 11 3 0 30 21191.2 2 0 0 0 2 383.4

Germany 9 0 0 1 10 29724.8 1 0 0 0 1 155

Iran 6 0 0 2 8 25607.3 0 0 0 0 0 0

Russia 4 0 2 0 6 1824.8 0 0 0 0 0 0

74

Switzerland 2 1 1 0 4 2108.5 0 0 0 0 0 0

Cyprus 2 1 0 0 3 650.9 0 0 0 0 0 0

China 3 0 0 0 3 5082.1 0 0 0 0 0 0

UK 2 1 0 0 3 15026 0 0 0 0 0 0

France 3 0 0 0 3 2974.1 0 0 0 0 0 0

S.Korea 3 0 0 0 3 7349 0 0 0 0 0 0

USA 0 2 0 0 2 481.3 0 0 0 0 0 0

Italy 1 1 0 0 2 1246.4 0 1 0 0 1 64.3

Sweden 0 1 0 0 1 49 0 0 0 0 0 0

Malaysia 1 0 0 0 1 65.3 0 0 0 0 0 0

Uzbekistan 1 0 0 0 1 60.8 0 0 0 0 0 0

Belgium 0 1 0 0 1 23.8 0 0 0 0 0 0

Austria 1 0 0 0 1 649.2 0 0 0 0 0 0

Holland 0 0 0 1 1 68.1 0 0 0 0 0 0

Canada 1 0 0 0 1 94 0 0 0 0 0 0

Pakistan 1 0 0 0 1 156.4 0 0 0 0 0 0

India 0 0 0 1 1 2437.9 0 0 0 0 0 0

Spain 0 1 0 0 1 105.6 0 0 0 0 0 0

EU 1 0 0 0 1 7874.6 0 0 0 0 0 0

Total 57 20 6 5 88 124851 3 1 0 0 4 602.7

Source: SIA Data

Table 68: Gross Licensed FDI’s under the law No.10 of 1991 and LD

No.8 of 2007 from all States by activity, investment costs for the period 1991-2007 in comparison with 2007

Years 1991-2007 2007

Activity Activity

state

Indu

stria

l

Tran

spor

tatio

ns

Agr

icul

ture

Oth

ers

Total Costs in million SYP In

dust

rial

Tran

spor

tatio

ns

Agr

icul

ture

Oth

ers Total

Costs in million SYP

Arabian Gulf

States 35 5 6 5 51 288071.6 2 1 0 2 5 131214.4

Other Arab

States 46 7 30 3 86 29872.6 11 1 4 0 16 3762.6

Total States 81 12 36 8 137 317944 13 2 4 2 21 134977

Non Arab

States 57 20 6 5 88 124851 3 1 0 0 4 602.7

Total 138 32 42 13 225 442795 16 3 4 2 25 135580

Source: SIA Data

75

C- Implemented Foreign Investment Projects: Syria witnessed big foreign investments during the last three years as the Iranian investments were estimated to be about $ 60m. And the Turkish investments were over $ 50m. In several sectors.

Table 69: Executed FDI during the period 2004-2007

Sector Executed FDI in 2004

Executed FDI in 2005

Executed FDI in 2006

Executed FDI in 2007

Oil Sector Investments 157 100 111 126

Tourism Sector Investments 60 300 225 370

Investment Encouragement Law Investments

13 55 77 100

Insurance Sector Investments 0 0 93 24

Banking Sector Investments 45 45 94 130

Off-shore Sector Investments 11 70 26 53

Other Sectors Investments 17 18 21 25

Total 303 588 647 828 Source: Balance of payment CPS

Table 70: executed FDI under the Law No.10 of 1991 for the period

1991-2007

Job Opportunities

Investment Costs in Million SYP

Execution percentage

No's executed projects

14595 93489 52% 117

Source: SIA data D- Arab-Arab Investment Trends: The private Arab investment movement witnessed great progress during the last few years as the Arab-Arab private investments reached about $ 35.5 b. in 2005 in comparison with very modest levels they had in previous years that ranged from $

76

2b. In 2000 and $ 4b. in 2004. The Investment Climate Report of 2006 issued by the Arab Organization for Investment indicates that private Arab-Arab investments of 9 Arab countries: Jordan, Tunisia, Saudi Arabia, Sudan, Lebanon, Libya, Egypt, Morocco, and Yemen reached about $ 17.6 b. in 2006.

0

5000

10000

15000

20000

25000

30000

35000

40000

Qatar

Palest

ineOman

Bahrain Lib

yaAlg

eriaYem

enJor

dan UAE

Marroco Syr

iaTun

isia Egypt

Sudan

Lebano

n

Saudi A

rabia

Graph 20: Analytic Arab direct investment by the hosting states in 1995�2006 in million US$

Most of those investments were in the service sector that had 66%, industry sector 32%, agriculture 2% of the total Arab-Arab private investments11. The development of the Arab trade in the service sector contributed in the last few years to a new and qualitative increase in the Arab economic integrity.

Graph 21 sectoral distribution to the analytic Arab Investment for the year 2006 (%)

Industry; 32Agriculture; 2

Services; 66

11 Source: Al Emran Al Arabi Magazine, issue no.85 Feb.2008, p.78.

77

Chapter Six Proposals, Recommendations and Conclusions

1) Continue to improve the investment climate and to complete the

legislative system in this regard particularly in settling disputes in the field of trade and investments.

2) Enhance investment supporting services particularly in infrastructure fields such as transportation, telecommunications, electricity and energy.

3) Provide sufficient funding for feasibility studies and pre-feasibility ones for Arab joint projects and support the establishment of joint-ventures by making their funding resources available on commercial bases.

4) Establish an Arab Funding Corporation (AFC) for private sector funding.

5) Promote available investment opportunities: "A dollar spent on promotion brings about revenues more than a dollar spent as an aid or given through tax incentives programme"12.

We have now more than 174 investment promotion organizations in developed and developing countries. They are members of the World Association for Investment Promotion Agencies (WAIPA) that is a forum for sharing expertise and practices. The Syrian Investment Authority has taken several points into consideration in preparing for the next phase the most important of which:

o Benefit from the available training opportunities in the fields of languages and informatics in order to use internet services, and use electronic promotion, marketing, telecommunications, and negotiating skills in the future...etc.

o Work on informing all relevant employees continuously about the investment climate in Syria, the sectors of priorities, the emerging trends and the private sector activities…etc.

o Improve Syria's position and deliver the right image of it on the basis of its distinctive components and that it is the right destination for investment and provide many stimulating incentives.

o Benefit from all bilateral agreements on investment protection and promotion, avoid tax duplication, and benefit from high joint committees Syria has with several countries.

o The necessity to cooperate with the Syrian Investment Authority to succeed in its role and functions at different sectors (public sector, private sector, trade unions, chambers of commerce and industry, embassies, support centers, UN organizations, embassies of donor countries, national universities…etc), for the good of the investment climate in Syria.

o Maintain cooperation and scientific coordination with the councils of the industrial cities and the other government organizations in order to guarantee one equal treatment with potential investors.

o Enhance the contribution of the Investment Authority to all relevant training workshops and skills and capacity building activities that

12 Professor Lewis Wales, 2003.

78

transfer scientific knowledge and optimal practices in the field of investment promotion.

6) Activate the one-stop-shop concept in investment:

In order to facilitate and streamline procedures for investors particularly after the issuance of the Decree on establishing the Investment Authority that provided for establishing a One-Stop-Shop Directorate that works through authorized representatives at the relevant ministries and organizations to handle requests, procedures and licenses of investment projects, that means the necessity to show the best care and attention for the investors efforts by means of making it an optimal service point by activating it and expanding its authorities to give licenses

7) Activate the qualitative training on investment promotion methods and instruments:

The human resources are the most important factor of success for the investment as they are the front line in the implementation of the investment promotion policy, receiving investors, responding to their inquiries, and there is a great and urgent need for capacity building on the core functions of promoting and marketing investment on the basis of professional skill in the business field. In order to formulate strategies and local instruments for investment promotion in line with the international standards, Syria needs a wide-scale process of capacity building and supporting programmes: (EU-ANIMA, UNDP, UNIDO, UNCTAD, FIAS, and WAIPA). It is necessary as well to link those programmes with well-defined purposes so that to subject them to a monitoring mechanism integrated in their structure. Thus the accumulated bloc resulted from those concentrated programmes on the micro level will by time reach a level in which it achieves the desired change (quantum leap) on this micro level. The Syrian private sector may participate in this process to confirm its sense of social responsibility by means of providing the required support to the Syrian Investment Authority in the field of consultative services, publicity and advertisement, market information and logistics…etc.

8) Active participation in regional programmes: There is an urgent need for Syria to enhance its participation in regional and international programmes such as ANIMA and OECD…etc since the type of exchange and the participation in model practices accumulated by those programmes is highly useful for the quick development of the Syrian experts' capacities. Weaknesses of the investment climate:

� There are some administrative barriers the investors still face in getting licenses due to the several procedures in relation to businesses the investor must handle and the circles of routine that has started to get gradually less intensive, and that entails more costs and time.

� Poor funding for industrial projects as the funding provided by specialized government banks requires conditions and additional heavy guarantees, whereas the private banks are still of limited readiness in this field.

� Poor registration mechanism in the social insurance system for people working in the investment projects in general to prevent the investors

79

from evading from registering their workers or not to give right declarations about their real wages and to better regulate the labour market in order to benefit from the available human capacities in unemployment absorption.

� The necessity to establish branches for the Investment Authority in the governorates to follow up the procedures required for the investors without having to refer to the main headquarter.

� The incomplete process of developing and modernizing the laws and legislations that provide a healthy investment environment such as the Real Estate Investment Law and the incomplete land use plans that enable us to see a future investment plan for Syria, knowing that efforts are still going on towards drawing a developed investment plan that guides the investors to the available investment opportunities, the competitive sectors and the investment projects of priorities.

According to what we have said, Syria has adopted a new methodology of thinking and keeping up with the international practices in the field of investment promotion and building up an image that shows its location's distinctive features among those who compete to attract direct foreign investment, and here lies the necessity to develop all marketing and advertising tools, unleash the Syrian Investment Authority, and take steps towards building up the existing capacities. It would be useful to mention the following points in this regard:

� The successful empowerment of the new Investment Authority to implement a coherent strategy (that is linked with national priorities and flexible enough to accommodate change as necessary) depends on the well collaboration of efforts made by government and NGOs. Cooperation should be made as well to succeed in its marketing plan, the one-stop-shop principle in addition to the intensive and continuous training including attending international activities and events.

� Syria should think of joining the World Association for Investment Promotion Agencies (WAIPA) that is a forum that includes more than 174 investment promotion agencies from all over the world.

Conclusion:

The report of this year indicates that Syria today has become a main gate for investment as the recent years witnessed a quantum leap. We do not claim here that the investment environment has become complete since we still have big tasks to improve this environment and that are related to dealing with other important and supporting aspects such as the regulatory, legal and judiciary structure and going on in the administrative reformation process, facilitating the regulations and combating bureaucracy. And that's what we are working on and that guides us in the next step so that the stimulating points the investment has got will not lose their efficiency by time, and we are totally aware that any development strategy is based on clear visions and perseverant work. Therefore realizing our ambitions in increasing the investments and guaranteeing the continuity of this increase in order to realize the economic development pushes us to give our utmost care for the investment climate through enhancing all procedures that would help in this regard and following up what is not implemented of them.

80

Investment has special status and importance in the 10th five year plan with which the development directions of the country are built as well as the desired growth amount, rate and levels on a national level or on the level of the economic activities. This care reflects the seriousness of the society in rationalizing the employment of its government and private funds to increase the productive capacities of the country and to absorb more unemployed labour force, pave the way for the foreign investment flow in order to get them involved in pushing forward a comprehensive development movement by means of development and modernization process led competently by Mr. President Bashar Al Assad. The noticeable development monitored by investment indicators of 2007 in all sectors whether in terms of projects numbers or their investment costs or the job opportunities they create in addition to the direct foreign investment flow all that confirm the fact the steps taken by the Supreme Council of Investment through its decisions and recommendations including the authorizations it gave to the Board of Directors of the Investment Authority helped a great deal in facilitating procedures and in improving the investment climate in Syria. All those aspects cannot be considered aside from the tough surrounding political circumstances in the region as the international circumstances have their effects on them, and that makes us more determined than ever to push our economy forward and to move on in our economic reform process towards the realization of our development objectives for the good of our country and citizens. Damascus in \3\2008.

81

(Annex)

Table 71: List of the Large Investors of the executed investments under the investment encouraging lass whose investment costs exceeds the half billion SYP

Project’ owner Project purpose Place of the investment

Costs in m SYP

Staff

1The National White Sugar Joint-stock

Company

Processing the row molas to produce yeast,

and medical alcohol Homs 13387 2312

2

Engineering Industry and Iran Khodro Company

and Alsultan trading Company

Assemble and make the passenger' cars

Rural Damascus 2989 127

3Mahmood

Sulayman Tlass Ferzat and Co.

Hydrate the Cotton oil and the sunflower and

the Soya's Homs 2689 100

4Saipa Irani Co. and Hamisho Trading

Co.

Assemble and manufacture the passenger' cars

Homs 2427 606

5 Ahmed Swaydi and Badi Droubi & Co's

Manufacturing electrical cables, antenna, connections and

pluggers.

Rural Damascus 2360 350

6 Nael Daleel Bin Ahmed

Producing, preparing and processing Curtains &

furniture’s. Aleppo 2248 46

7Hama' Chamber of

Industry and Commerce & Co's

Hydronating, food oils, ghee, butters and dairy. Hama 2234 370

8Fromojiory Bel & Sopaique French

Co

Production of cooked cheese (The laughing Cow, Regal Becon,

Keri...)

Rural Damascus 2219 318

9 Amber AsbitSanjian son of Georgy

Craving Jewelleries, and precious stones Aleppo 2137 35

10Bassam Olabi

&Mhd Zehdi Olabi Co.

Circular cotton and compined yarn

production Aleppo 1967 126

11 Issam Enpoba Food oil and animal feeds, and soupes

production Homs 1753 254

12 The Swiss Nestle Manufacturing Milo, ketchup, fine pasta,

soups and dry bonbon

Rural Damascus 1711 109

82

13 Mhd Labib Bros' Co.

Agricultural products’ fill up bags Homs 1573 338

14 Ali Mhd Ismael & Partners

Producing fresh and dried drinks & squeezes Lattakia 1393 453

15 Mhd Mazen Dabool & Partners

Producing plastic chips for irrigation tools, and

food, health chips

Rural Damascus 1266 50

16 Saeb Nahhas & Partners Pharmaceutical industry Rural

Damascus 1264 143

17 Mhd Samer Akkad & partners

Fizzy and non-fizzy drinks from artificial and natural concentrates and condensed drinks, and

CO2

Rural Damascus 1253 270

18Mhd & Muafaq &

Mhd Mumtaz Daboul & Partners

Process and paint aluminium and steel bars

Rural Damascus 1197 76

19 Mhd Mahran Blushi Babies and lady’ nappies Dara'a 1039 45

20 Ali Ismael & Partners

Citruses squeezes vegs and fruits and concentrate it

Lattakia 930.6 157

21Sabbagh &

Sharabati CompanyNoor Establishment

Produce and process the textiles and cotton

threads Aleppo 917.5 538

22

Tahseen Abdulrazaq &

Partners (Saudi)

Metal and steel bars and blocks Lattakia 914.5 124

23 Mhd Sheikh Omar & Partners

Synthetic, cotton, Viscose & Polyester threads production

Aleppo 873.2 200

24Isam son of Khair

alla Inpuba & Partners

Squeezing Soya grains, and sunflower to produce

plants ghee and margarine, butter,

mayonnaise lysine, and Soya wheat

Homs 868.3 113

25Mhd Mutaz Tarabishi &

Partners

Produce aluminium pipes and metal profiles.

Rural Damascus 849.9 300

26 Wael Naqri

Produce and yarn and dye and process acrylic

threads and twisted threads

Aleppo 788.2 168

27

Mustafa Mutaf Oghlu son of

Ahmad (Turkish)

Produce and process acrylic and Channel and

Fantasia threads Aleppo 745.5 48

83

28 Mhd Mamoun Malt & Mhd mazen Malt

Produce metal profiles and electrical cable

holders

Rural Damascus 712.4 62

29

Palancia Joint-Stock

Company for industry & trading

Produce circular , printed and dyed textiles Aleppo 704.9 200

30 Khaldoon ALEK Produce poly ethylene pipes and accessories Aleppo 688.2 150

31Mhd Aref son of

Hasan Mahayni & partners

Produce Grasp, pull, and twist the Polyester and fibbers blowing

Rural Damascus 686.1 200

32 Abraham Muselli Kurdi

Produce food pure oils and refine it, and

produce ghee Hama 679.7 78

33Waleed Tabba &

partners (German & Arab)

Produce Grasp, pull, and twist the Polyester and

fibbers blowing

Rural Damascus 674.1 318

34Mahmood Shbarek

& Bros' sons of Adel

Produce mixed and circular threads in all

thicknesses Idleb 660.4 78

35 Mustafa Muselli Kudi

Extract food oil and process its produce for

soupes Hama 658.1 65

36Jamal Qunburieh &

Hassan Debs & partners

Produce tissues from paper paste

Rural Damascus 634.0 100

37 Bakri Farwati & Partners

Produce pasta and Pastries and ethyl Aleppo 627.2 335

38 Khaled Olabi son of Ahmad

Polyester Threads Manufacturing and

preparing Aleppo 620.4 99

39Mhd Bader &

Ryadh Touma & Partners

Produce glycerine and soupes

Rural Damascus 618.5 91

40Muneer Nahas son

of Mustafa & partners

Produce poly ester and Nylon threads by

processing half made threads POY

Aleppo 609.5 125

41 Mhd Sheikh Taha & Partners

Producing stoned coloured glasses in all

types Aleppo 601.2 90

42Nizar Asa'ad &

Habib Betinjaneh & Partners

Produce food oil, ghee, and artificial butter Tartous 594.6 146

43 Hassan Hasan Hajar & Partners

Produce 100% acrylic threads

Rural Damascus 587.9 327

44 Yousef Aswad & Produce fibre pipes and Aleppo 585.2 66

84

Partners storages

45 Mahmoud Mhd Zo'ubi & Partner

produce Chemical and natural medicines

Rural Damascus 584.1 107

46 Hani Kamil Azooz Produce Formica boards and fibres and papers Aleppo 567.9 125

47

Almateen & Alkhurafi Kuwaiti

Companies & partners

Produce PET capsules to manufacture plastic

containers Homs 547.9 60

48Shehade

Salahudeen & Partners

Produce ciders, Tomato, and concentrates Swayda'a 530.0 63

49 Abdullah Jarboo Produce Grasp, pull, and twist the Polyester Aleppo 508.4 61

50 Naela Karbooj dtr of Najeeb

Produce the artificial and mixed threads Aleppo 507.4 44

51Mustafa

Abdulqader Fakhuri & partners

Producing slaughtering, cleaning, and cooling,

freezing, and processing chickens

Hama 503.8 114

52 Haytham Sobhi Jood & partners Home appliances Lattakia 503.5 140

53 Munther haj Maf son of Kazem

Manufacturing and printing Croject Zigzag

cartons

Rural Damascus 502.2 49

85

Table72: Signed and Valid Arab and international agreements A- Investment Agreements:

State Date of

signing the agreement

Ratification number and date Status

Senegal 14/11/1975 Decree 589 on 3/3/1976 Valid USA 9/8/1976 Decree 33 on 1/8/1977 Valid

Switzerland 22/6/1977 Decree 24 on 12/7/1978 Valid till date of renewal

Germany 2/8/1977 Decree34 on 11/9/1978 ValidFrance 28/11/1977 Decree 30 on 31/7/1978 Valid

Pakistan 25/4/1996 Law No.5 on2/7/1997 Valid from 4/11/1997 China 9/12/1996 Law No.10 on 4/8/1998 Valid from1/10/1999

Indonesia 27/6/1997 Law No.19 on 31/12/1997 Valid from 20/2/2000

Iran 5/2/1998 Decree No.3 on 11/2/1998 Valid from 16/11/2005

Belarus 11/3/1998 Decree No.8 on 4/8/1998 Valid from1998

Bulgaria 21/5/2000 Decree No.10 on12/5/2001 Valid from 10/11/2001

Italy 20/2/2002 Decree No.43 on 13/7/2002 Valid from 13/11/2003

Ukraine 21/4/2002 Decree No.56 on 8/9/2003 Valid from 16/3/2003

Greece 23/2/2003 Decree No.39 on 27/7/2003 Valid from 27/2/2004

Spain 20/10/2003 Decree No.19 on 12/4/2004 Valid from 14/12/2004

Turkey 6/1/2004 Decree No.40 on 1/7/2004

Valid from 3/1/2006Russia 27/1/2005 Law No.21 on 16/6/2005

Republic of democratic

Korea 14/5/2006 Law No.51 on 5/12/2006 Valid from 20/12/2006

Federation of Nigeria 10/12/2006 Law No.14 on 17/6/2007 Under procedural

completion Tajikistan 10/2/2007 Under verification

Cyprus 10/6/2006 Under procedural completion

Source: Ministry of Economy and Trade

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B- Trade agreements:

State Date of signing the agreement

Ratification number and date Status

Sirlanka 9/10/1966 Decree No.29 on 19/10/1966 Valid

Pakistan 11/8/1969 Decree No.342 on 23/11/1969 Valid

Tanzania 12/2/1974 Decree No.166 on 15/3/1974

Valid from 10/8/1975

Indonesia 18/3/1976 Decree 1220 on9/7/1977 Valid

India 20/4/1978 Decree 1570 on 1978 Valid from 5/3/1979

Guinea 22/1/1979 Decree 1209 on23/1/179 Valid

Albania 17/6/1979 Decree 1252 on 8/2/1980

Niger 26/6/1980 Decree 2661 on 22/12/1980 Valid

Democratic Korea 28/6/1982 Law No.5 on

8/2/1983 Valid

Argentina 6/9/1989 Decree 127 on 8/11/1989

Valid from 21/6/1993

Chile 27/2/1990 Decree No.12 on 24/5/1990

Valid from 21/4/1992

Turkmenistan 21/8/1992

Azerbaijan 28/3/1992 Decree No.10 on 11/7/1992 Valid

Armenia 30/3/1992 Decree No.7 on 11/7/1992 Valid

Vietnam 12/5/1994 Decree 12 on 27/6/1994

Valid from 26/10/1994

Pakistan 25/4/1996 Decree No.172 on 15/6/1997 Valid

Iran 21/8/1996 Decree 241 on 10/11/1997

Valid from 10/4/2002

Cuba 28/10/1998 Decree No. On 19/10/2000 Valid

Tajikistan 29/3/1992 Decree No.11 on 11/7/1993

Valid from 16/9/1993

Ukraine 21/4/2002 Decree No.56 on 8/9/2003

Valid from 16/3/2003

Malaysia 18/8/2003 Decree No.49 on 15/8/2004

Valid from 15/8/2004

Source: Ministry of Economy and Trade

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All European states are governed by the cooperation Agreement signed on 1977 C- Commercial, trade and technical Cooperation Agreements

State Date of

signing the agreement

Ratification number and date Status

Russia 15/4/1993 Law No.11 on 22/6/1993 Valid from 13/7/1993

Armenia 30/4/1995 Decree No.177 on 15/6/2002 Valid

Belarus 11/3/1998 Decree No.8 on 4/8/1998 Valid from 1998 Cuba 20/10/1998 Decree 142 on 9/5/2002 Valid

China 11/1/2001 Decree No.40 on 26/8/2001 Valid from 18/10/2001

Ukraine 21/4/2002 Decree No.8 on 25/1/2003 Valid from 16/3/2003

Venezuela 11/1/2007 Decree No.2 on 11/2/2007 Under verification

Nigeria Federation 10/12/2006 Law No.13 on 17/6/2007 Under completion of the

validation procedures Source: Ministry of Economy and Trade

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D- General Table of the agreements draft under consideration and negotiation

State Agreement Subject Notes

South Africa Investments' mutual protection and encouragement agreement

plan

South Africa Commercial, Trade and Technical Cooperation Agreement

Senegal Investments' mutual protection and encouragement agreement

plan

With the Senegal side and waiting for a response

Brunei Trade agreement plan With the Brunei side and waiting for a response

Guyana Trade agreement plan Under consideration and negotiation in both states

Malaysia Investments' mutual protection and encouragement agreement

plan

Under consideration and negotiation in both states

Brunei Investments' mutual protection and encouragement agreement

plan

With the Brunei side and waiting for a response

Finland Investments' mutual protection and encouragement agreement

plan

With the Finish side and waiting for a response

Belgium Investments' mutual protection and encouragement agreement

plan Signed with the initials

Austria Investments' mutual protection and encouragement agreement

plan A final form was reached

Japan Investments' mutual protection and encouragement agreement

plan

With the Japanese side & waiting for a response

Check Republic Investments' mutual protection and encouragement agreement

plan Notes are exchanged

Slovakia Investments' mutual protection and encouragement agreement

plan Notes are exchanged

Albania Investments' mutual protection and encouragement agreement

plan

Two agreement drafts where submitted by the Albanian

Kazakhstan Investments' mutual protection Waiting for Kazakhstan side

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and encouragement agreement plan

Granada Trade agreement plan Waiting for the Grenadian response

Japan Trade agreement plan With the Japanese side and waiting for the response

Sweden Investments' mutual protection and encouragement agreement

plan

With the Swedish side and waiting for a response

Norway Investments' mutual protection and encouragement agreement

plan

With the Norwich side and waiting for a response

Croatia Investments' mutual protection and encouragement agreement

plan

With the Croatian side and waiting for a response

Denmark Investments' mutual protection and encouragement agreement

plan

Under consideration in both sides

Cuba Investments' mutual protection and encouragement agreement

plan

Under consideration in both sides

Georgia Investments' mutual protection and encouragement agreement

plan

The agreement is under consideration by both sides

Lithuania Investments' mutual protection and encouragement agreement

plan

Under consideration in both sides

Bosnia & Herzegovina

Investments' mutual protection and encouragement agreement

plan

Waiting for the Bosnian response

Turkmenistan Investments' mutual protection and encouragement agreement

plan

Waiting for the other party response

Romania Investments' mutual protection and encouragement agreement

plan

Reaching the semi- final draft

The NetherlandsInvestments' mutual protection and encouragement agreement

plan

With the Dutch side & waiting for a response

Vietnam Investments' mutual protection and encouragement agreement

plan

With the Vietnamese side and waiting for a response

Hungary Economic Cooperation Agreement plan Signed by initials

Bulgaria Economic Cooperation Agreement plan Under finalizing the draft

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E- Free Trade agreements and prioritising trade

- the Euro-Med Agreement for a free trade zone signed with Turkey on 22/12/2004 in Damascus and ratified by the Decree No.37 on 4/5/2005, and was valid since 1/1/2007

- Prioritising trade agreement signed with Iran on 23/2/2006 in Damascus

- Free Trade area established by the partnership agreement with the EU marked with the initials on 19/10/2004

- There are a suggestion for a prioritising trade agreement with Pakistan

- There are as suggestion for free trade zone with Ukraine

Cooperation protocol signed between the SIA and other States and Corporate

Signing Party State

Syria Other party Date of

signature

Tunisia Ministry of Economy & Trade

The Foreign Investment Promotion Agency 23/1/2001

Jordan SIA Jordan Investment Board 29/6/2006

Libya Ministry of Economy & Trade

Libyan Foreign Investment Board, L.F.I.B 10/5/2007

Egypt Ministry of Economy & Trade Ministry of Trade & Industry 14/12/2006

Malaysia Malaysian Ambassador in Syria

Industrial Development Agency 3/6/2007

Kuwait SIA Kuwait investment Authority 12/2/2007

Sudan Ministry of Economy & Trade Ministry of Investment 31/5/2001

Kuwait SIA IAIGC: Inter Arab

Investment Guarantee Corporation

18/2/2008

Source: SIA Data

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List of Government Offices and Important parties

Syrian Investment Agency Alshahbander St.

Tel: +96311 2062 Tel: +96311 4412039 Fax: +96311 4428124

syinvest@mail.sy www.investinsyria.org

Prime ministry Kafersouseh St. Damascus

Damascus Tel: +963112459093/2137529

Fax: +963112456680 www.youropinion.gov.sy

Businessgroup@postmaster.co.uk Ministry of Information

Dar alba’th Almazzeh Autostrade Damascus

Tel: +963116624220/6624217 Fax: +963116665166

www.moi.gov.sy

Ministry of Industry Maysaloon St. Damascus

PO Box 12835 Tel: +963112231834/2231845

Fax: +963112231097 www.syr-industry.gov.sy

Min-industry@mail.sy

Ministry of interior Almarjjeh , Damascus

Tel: +963112220102/2220101 Fax: +963112223428

somi@net.sy

Ministry of Foreign Affairs Muhajereen Shwra Damascus

Tel: +963113331200/1/2/3 Fax: +963113327620 Syr-mofa@scs-net.org

Ministry of oil & Mineral Resources Adawi, Damascus

Te: +963114445610/4455972 Fax:+963114457786

www.mopmr-sy.gov.sy mopmr@net.sy

Ministry of Electricity Alquatly St, Damascus

Tel: +963112119934/5/6 Fax: +963112227736

peegt@net.sy

Ministry of labour & Social Affairs Yousef Azma, Damascus

Tel: +963112210355/2225948 Fax: +963112247499

Ministry of Economy & Trade Maysaloon Street, Damascus

Tel: +963112213513/4/5 Fax: +963112225695

www.syrecon.org econ-min@net.sy

Ministry of Tourism Alquatly Street, Damascus

Tel: +963112237940/2210122 www.syriatourism.org Min-tourism@mail.sy

Ministry of Agriculture and agrarian reform

Hijaz Square –Aljabery st Damascus Tel: 2213613/4

www.syrian-agriculture.org agre-min@syriatel.net

Ministry of Housing & Public Utilities Yousef Azma Square

Te: +963112217570/1/2 Fax:+96311 2217570

mhu@net.sy

Ministry of Transportations Abo remaneh Damascus Tel: +963115447101/2/4

Fax:+963115426477 www.min-trans.net

Gcpt-dam@min-trans.net Chamber of Commerce Federation Ministry of finance

92

Musa bin Nusair Street Damascus Tel:+963113337344/3311504

Fax:+963113331127 Syr-trade@mail.sy

Tajreeda Square Damascus Tel:+9631122163001/2/3

Fax:+963112224701 mof@net.sy

Industrial City of Adra Adra, Rural Damascus

Tel:+963115850018 www.aic.org

Ministry of Local Administration and Environment

Yousef Azma Square, Damascus Tel:+963112317911 Fax:+963112316921

www.mlae-sy.org Industrial City of Sheikh najjar

Sheikh najjar , Aleppo Tel:+963214769011 Fax:+963212272479

www.aic.org.sy Alp-city@net.sy

Industrial City of Hassya Hassya, Homs

Tel:+96331536000 Fax:+96331530003

www.ic-homs.sy customer@ic-homs.sy

Central Bureau of Statistics Nizar Kabbani St. Abo Remaneh

Damascus Tel: +963113335830 Fax:+963113322292

Central Bank of Syria Tajreeda Square, Damascus

Tel:+963112216802 Fax:+963112248329

www.cbs.gov.sy

United Nations Development Programme –Syria Mazzeh. Damascus Tel:+963116129811 Fax:+963116114541 www.undpprojects.sy

Investment.staff@undpprojects.sy

State Planning Commission Ibn Alnafees, Damascus

Tel:+963115161024 +963115161035

Fax:+963115161011 www.planning.gov.sy

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Important web links in Syria

Syrian Investment agency www.investinsyria.org Ministry of Irrigation www.irrigation.gov.sy Ministry of industry www.syrianindustry.org Ministry of Agriculture and Agrarian Reform

www.syrian-agriculture.org

Ministry Of Expatriates www.ministryofexpatriates.gov.sy Ministry of Tourism www.syriatourism.org Ministry of Culture www.moc.gov.sy Ministry of Higher Education www.mhe.gov.sy Ministry of Education www.syrianeducation.org.sy Ministry of Transportations www.mot.gov.sy Ministry of Information www.moi.gov.sy Ministry of Communications & Technology

www.moct.gov.sy

Ministry of Health www.moh.gov.sy Ministry of Finance www.syrianfinance.org Ministry of Local Administration & Environment

www.mlae-sy.org

Commercial Bank of Syria www.cbs-bank.com Syrian Petroleum Company www.spc-sy.com The Syrian Company For The Storage and Distribution of Petroleum Products

www.mahrukat.gov.sy

Housing General Establishment www.ghe-syria.com The Real Estate Bank www.banquecentrale.gov.sy/ban-

sup/Syrian-banks/syrien-banks-fr.htm#3- Real Estate Bank

Federation of Syrian Chamber of Commerce

www.fedcommsyr.org

Damascus Chamber of Commerce www.dcc-sy.com Damascus Chamber of Industry www.dci-syria.org Aleppo Chamber of Commerce www.aleppochamber.com Lattakia Chamber of Commerce www.chamberlattakia.com Aleppo Chamber of Industry www.aleppo-coi.org Homs Chamber of Commerce & Industry

www.homschamber.org.sy

Tartous Seaport Administration www.tartousport.com

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Syrian Arab Republic General Indicators Indicator 2005 2006 2007

Population in millions 18356 18941 19.405

GDP at constant prices (m SYP) 1134861 1192739 1269820

Average GDP per capita at constant prices in SYP 61384 62971 65438

GDP at current prices (m SYP) 1490798 1708748 1993233

Average GDP per capita at current prices in SYP 80636 90214 102717

Urban % 53.5

Population growth rate% 2.37

Family member average 5.3

Population density 102

Area in Km² 185.180

Capital Damascus

No’s of governorates 14

Official Language Arabic

National currency Syrian Pound

Government system Republican

Week holidays Friday & Saturday

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Quiz and Answers concerning the Investment Law

1- Can the non-Syrian individual own and rent lands and

properties, needed to settle up his investment? Yes the investor can own and hire lands and properties needed to settle up his new investment or expansion even if the owned area exceeded the limits declared in any other laws and regulations.

2- Do the Investments enjoy the protection from expropriation ex-

confiscation or expropriation or use reduction act?

Yes, the investments enjoy the protection from any expropriation, confiscation or use reduction act in their ownerships or limitation from the ownerships and its returns unless it is for the public usefulness, and in return for suitable compensation and fair for the investor equal to the general value of the investment right before the expropriation in a transferable currency with the foreign fund, and with reservation to the rules and regulations of the taxation law No.341 of 1956, where there are no way to expropriate anything unless in a court decision.

3- Can the investor transfer the money and profits gained by the

foreign investment (repatriation)? Yes, the investor shall have the right to re-transfer the outcome of dealing with his/her share of the enterprise in a convertible currency after paying the taxes levied on the process of dealing.

4- Can the investor transfer the profits and interests gained by the foreign investment abroad in convertible currency?

Yes, the investor shall have the right to re-transfer annually transfer abroad the profits and interests resulting from the invested foreign capital in a convertible currency upon payment of the tax levied on these profits and interests. Six months after the foreign capital transference, an investor shall have the

right to retransfer his foreign capital abroad, if difficulties and conditions beyond the investor’s ability prevented him from investing that capital. These difficulties and conditions are estimated by the Board, which, in exceptional circumstances, shall have the right to approve transferring the foreign capital without conforming to the aforementioned period. - Arab and Foreign experts, workers and technicians working for any approved enterprise, shall have the right to transfer abroad 50% of their net wages, salaries and bonuses, and 100% of their end-service allowances, in a convertible currency, on the condition that they pay the taxes levied on these wages, salaries and bonuses.

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5- Can the investor import and export back the tools used for settling up or execution of his investment?

Yes, an investor shall have the right to import and export back the tools used for the execution of the investment assets pursuant to the approval of the Board.

6- Can the investor use insurance company for his investment?

Yes, an investor shall have the right to insure his enterprise at any of the insurance companies licensed in Syria.

Provisions of international bilateral and multilateral investment and investment insurance-related agreements effective in Syria and signed with other countries or Arab And international organizations shall be taken into consideration.

7- How investment disputes can be solved in case it occurred?

Investment-related disputes between an investor and Syrian public bodies and institutions shall be settled amicably. If the disputing parties could not reach a solution amicably in three months from the date of making a written notification for nn amicable settlement by one of the disputing parties, each of them shall have the right to take the case to one of the following ADR means:

1- Arbitration. 2- Competent Syrian Courts. 3- Arab Investment Court formed upon the Allied Treaty for Investment of Arab Capitals in the Arabic Countries in the year 1980. 4- Investment Insurance and Protection Agreement signed by Syria and the Investor’s country, or any Arab or international organization.

* All investment-related disputes shall be considered by the competent court as Summary proceedings.

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The incentives of the FDI in Syria

8- Which activities and sectors benefit from the Investment Law' guarantees and incentives?

The investments in the following sectors benefit from the exemptions stipulated in the

Effective Income Tax Law and its amendments and all the advantages and guarantees Stipulated in this Legislative Decree:

� Agricultural and land reclamation enterprises. � Industrial enterprises. � Transport enterprises. � ICT enterprises. � Environment enterprises. � Service enterprises. � Electricity, Oil and Mineral Wealth enterprises. � Any other enterprise the Supreme Council decides to cover a

proposal by the Board.

9- Can the investments import all of its machinery and tools? Yes, Enterprises shall have the right to import all their needs, without being restricted to the provisions of import suspension, prohibition or restriction, direct import from the country of origin system and exchange system provisions.

10- What are the customs exemptions can the investment enjoy?

The imported assets shall be exempted from customs duties including machines, tools and equipment used in production process and no tourist transportation means, on the condition that they are exclusively utilized in the investment.

11- What are the developing regions in Syria?

The developing regions in Syria are just categorized in two areas: The first Developing areas which includes the following governorates: Damascus, Rural Damascus, Aleppo, Lattakia, Tartous, Homs, Hama The Second developing areas include the following governorates: Dara, Swaydaa, (Qunaytera, Deir ezzour, Arraqqa, Alhassakeh, Idleb) The minimum limit for the value of the assets in the first developing area is SYP 50 m, and in the second one is SYP 30 m.

12- What are the tax exemptions, investors may enjoy?

Legislative Decree (8) of 2007 for investment promotion includes that the investment projects licensed under its regulations shall benefit from the dynamic levy deduction Pursuant to the provisions of the Income Tax Legislative Decree of 2006 as follows: The tax shall be imposed on the net profits according to the following rates. − The income tax is imposed on the net profits achieved by a joint stock company whose shares are placed on the market for underwriting at a percentage not less than 50% with

98

A rate of 14% including all the additions, whilst the investments who won the license of the investment laws are taxed on the rate of 22%, this rate is reduced up on the following bases:

A- 2 degrees for the industrial enterprises established in the remote areas. The areas are: Idleb, Deir Ezzour, Ar Raqqah, Al-Hasakah, Dara’a, As Suwayda’ and Al Qunaytirah.B- 1 degree for the industrial enterprises which employ 25 workers or more legally registered at the National Insurance Scheme. C- 2 degrees for the industrial enterprises which employ 75 workers or more legally registered at the National Insurance Scheme. D- 3 degrees for the industrial enterprises which employ 150 workers or more legally registered at the National Insurance Scheme. E- 1 degree for the industrial enterprises established within the industrial cities. − 2 additional degrees of deduction shall be granted to the following enterprises: � All the licensed industrial enterprises under the provisions of the Legislative Decree (8) of 2007 in the industrial cities of Hesya and Deir Ezzor.

13- Which industries hold the obligation to pay the taxes and tariffs:

• The artificial and combined textile industries which depend on its production on the imported threads.

• Pure circular yarn • Production of the Alcoholic and non-alcoholic beers. • The woolen carpets.

14- Can the previous licensed investments under the law 10 of 1991

and its amendments continue enjoying the tax exemptions and benefits obtained till its last exemption period?

Yes, the previous licensed investments under the law 10 of 1991 and its amendments can continue enjoying the tax exemptions and benefits obtained till its last exemption period.